Friday, June 23, 2006

Interest Rates Continue to Rise

Interest rates continue to rise on mortgages. Rates are likely to increase over the coming months.

Concerns about inflation pushed the 30-year fixed mortgage rate to 6.71 percent this week from 6.63 percent last week, to what Freddie Mac says is the highest level seen since May 2002.

The 15-year fixed mortgage rate rose as well, climbing to 6.36 percent from 6.25 percent over the same time span. The one-year adjustable mortgage rate edged up to 5.75 percent from 5.66 percent; and the five-year hybrid ARM surged to 6.32 percent from 6.23 percent.
I do not expect interest rates on 30 year fixed rates to go above 7.25% this year.


  1. This is not good news for people who hope to someday buy. It's low interest rates that allowed so many people to become homeowners during the last 5 years or so. A class of perpetual renters will have been created where its members can never work their way out of their condition.

  2. Bitter home-debtors with ARMs will be losing sleep over this. Soon they will be parted with their ill-considered investments and will become lifelong renters with ruined credit, deep regrets, and destroyed self-esteem.

    Note to Lance: Anyone who has purchased in the last 5 years is almost certainly a homedebtor. Homedebtors live in perpetual fear of missed payments, rising taxes, and rising insurance. It is dishonest to refere to them as homeowners when the reality is they are slaves to their debt.

  3. David, Look what AOL just headlined:

  4. gaston, your jealousy is shameful. I am embarrassed for you.

  5. To the homedebtor who bought recently: And while I might admire your shoes, I certainly wouldn't want to be in your shoes.

  6. gaston,

    "deep regrets and destroyed self-esteem". Is that what renters have? You said homedebtor's will have this when they lose their homes, so the logical conclusion is that that is what current renters have.

    As I have said many times, I know no desperate, bitter homedebtors. It is only the renters who seem so afflicted. The Harvard Study suggests a loooong wait for crashing home prices.

  7. Lance said:
    "This is not good news for people who hope to someday buy."

    Ah, but why would you want to buy a home? It's an expense involving hundreds of thousands of dollars, with no real return for those expenses.

  8. whitetower,

    There most certainly is a return. In fact, housing beats the rate of inflation in addition to the intangible benfits.

    No one is saying a house should be your ONLY investment.

  9. Babbling Ben will not burst the housing bubble. He will raise slowly and tenderly. The currency markets will eventually force his hand though.

    A Redskins fan

  10. Redskin fan,

    The talking heads on CNBC seem to think he may have overdone the tightening but to save face will go 50 basis points in August and be done.

  11. Perpuetual renters!!!!

    OH NO! What they said is true - we have been priced out of the market forever.

    Lance, tell me what should I do??? Do you know of any homes for sale?

  12. anon asked:
    "Lance, tell me what should I do??? Do you know of any homes for sale?"

    none that you can apparently afford if you are waiting for that 50% drop to be able to buy.

  13. "It's low interest rates that allowed so many people to become homeowners during the last 5 years or so."

    this was true at first, but shameful lending and a speculative frenzy took over.

    "This is not good news for people who hope to someday buy."

    it's even worse news for floppers looking to sell for more than they bought.

  14. Housing is a bad investment. Let the people who can afford to throw money away buy them. The rest of us need to be patient, or do as those have done in NY for years, just rent and save money. This is from :

    "The crazed phase of frenetic home buying in Westchester, Rockland and Putnam counties has screeched to a halt — leaving some industry experts wondering if the sound they hear now is the housing bubble bursting.

    "The market isn't soft. It isn't even slow. It's dead," said Liz Rosenblatt, an agent with Fuerst & Fuerst Inc., a real estate firm in New Hempstead.

    Scott Stiefvater, a broker-owner at Stiefvater Real Estate Inc. in Pelham, said prospective homeowners are still looking at properties. "They just aren't buying," he said. "I'm getting a little worried.""

  15. It should be apparent by now that Lance is a paid real estate promoter/agent who also happened to have bought within the last 2 years. Bear that in mind when reading his posts -- he has a vested interest in denying the poor state of the housing market right now.

    A final word about Lance: Don't feed this troll.

  16. Bill, it's not feeding the troll. It's watching the little monkey dance!

  17. Anon
    the one above who just attacked David
    is one of the following;

    Works for the Bush Administration
    Works for the NAR
    Belongs to some right wing political organization
    Is ignorant and uninformed
    Is Karl Rove
    A republican
    Lives in a RED State

    OR, All of the ABOVE

  18. Everybody should take a few minutes this grim Saturday morning to read the story on the "little (overvalued) house" in Arlington - first page of the Washington Post real estate section.

    It's a nice little history of housing issues, and lending, that starts in the 1920's. You may find that episode remarkably familiar, maybe even deja vu all over again....

  19. david , give it up predicting, and listen to me. I was right all along that fed has to keep going to about 6%. You stubbornly, copying tidbits here and there, maintained 4.75 and then 5 as the max.
    learn from the master..

  20. Interesting segment on NBC4 this morning.

  21. As suggested, Lance admits on the DC housing bubble blog that he bought last year - what will be seen in retrospect as the peak of the housing crash.

    He says, 'A class of perpetual renters will have been created where its members can never work their way out of their condition.'

    Instead, owners like Lance (that bought last year) will be the perpetual owners of the homes they are in - unable to sell at an enormous loss, for 10 years or more. Lance may say 'so, what? who cares? I like my house' but for those who need to move (military families, those who get a new job, want to retire and leave the area, have kids and want to upgrade) this will be a painful experience.

  22. dorothea,

    thanks for the link ... it supports my point from yesterday that that McMansions in the outer burbs and exurbs are "out" and smaller (and closer-in) homes in the innerburbs and District are "in". the area is transforming itself, and prices (and commutes) are causing the core of the metro area to re-develop itself as the high-priced center to a high-priced world class city.

  23. This is not good news for people who hope to someday buy. It's low interest rates that allowed so many people to become homeowners during the last 5 years or so. A class of perpetual renters will have been created where its members can never work their way out of their condition.

    We bought in Seattle in Jan 2005...since then interest rates for a 30 yr fixed have gone from about 5.8% to 6.5.% and rising. Prices in Seattle continue to sky rocket and inventory is still tight. Our house is now worth 75K more then April of last year. So in retrospect it was a really smart decision to buy. The combination of rising interest rates and rising prices have made buying this year MUCH more expensive.

    Here's some predictions from the UCLA anderson report:

    "The bottom line is when you look down the California history and the history of other states, you only see a significant decline in home price ... in recessions. And it has to be a fairly big recession," Ratcliff said. "So since I'm not looking for a 1990s-style recession any time in the next two years, I'm not predicting that kind of decline in home prices."

    In short, to significantly push down home prices, California's economy would have to tank, losing many jobs. That's unlikely to happen, the study says.

    That's good news for homeowners and bad news for aspiring home buyers.

    "There definitely is this contingent that secretly hopes that home prices are going to tank so they can afford to buy a home," Ratcliff said. "And that's just not going to happen."

  24. dc_too thanks for the article. deja vu, i'll makes 1920-25 sound identical to 2001-2005. didnt know they had creative financing back then. so i guess requring 3x median annual household income for this shack built precisely for middle class is normal. nothing wrong here folks, move along.

    that video was hilarious!! building an 8br mcmansion and then deciding, nah we'd be happy in a 2 br condo!? nothing like impulse buying/building

  25. That's the scary part - everyone thinks "it's different this time." It's not - there is nothing new or different about episodes of speculation predicated on leverage - debt, borrowing, call it what you like.

    What cracks me up about that article is that the banks supposedly "found out" after the fact that downpayments in the 1920's were financed with borrowed money, too. Right. Today we just call it a "piggy back" loan. Same sh*t, different day.

  26. What about transaction costs of buying and selling a home, and the illiquid nature of selling a home especially in a higher interest rate environment?

    To buy a condo you have some pretty high costs involved. A $500K condo will have like $20K in closing costs associated with it. Selling a $575K condo will have a 4-6% brokers commission, transfer taxes, attorney fees, board processing fees, etc.. In the end, if you buy a condo for $500, you MUST sell it for $575K just to break even.

    I love when people do not discuss the whole story.

  27. "like $20K in closing costs associated with it. "

    Yeah, right. Why don't you just say $1 million in closing costs. It will help you make your point.

  28. "To buy a condo you have some pretty high costs involved. A $500K condo will have like $20K in closing costs associated with it. Selling a $575K condo will have a 4-6% brokers commission, transfer taxes, attorney fees, board processing fees, etc.. In the end, if you buy a condo for $500, you MUST sell it for $575K just to break even."

    Even if your numbers were right, which they are not, the number would be $540-550k to break even (depending on the commission). I guess math's not the bubblehead's strong suit.

  29. Anonymous said...
    "dc_too thanks for the article. deja vu, i'll makes 1920-25 sound identical to 2001-2005."

    However, there IS one GIGANTIC difference. If you really read that article, you saw that in response to what happened back there, all types of lending regulations were put in place and oversite agencies/orgs established precisely to prevent a recurrance of what happened.

    Also, I find it amusing that all the bubbleheads have commented on this "validating" article (even if misread), but haven't made one single comment on the UCLA Anderson report that was posted in the thread. Ditto that even the Greenspan himself said that there was no bubble ... ditto the Harvard Report issued last week saying there was a soft landing occuring.

    Of course, all these experts are wrong. And the bubbleheads are right. It's all a mass consipracy from the President on down to the realtors and all the "think tanks" to get you to artificially prop up the economy.

    Franky, I believe "IN DENIAL" pretty much sums up what we're witness from the bubbleheads on this blog.

  30. Spoken like a true real estate agent, Lance!

    Now, give us some reasons why we should listen to the same, tired arguments you make -- especially since you earn your living from this housing market...

  31. yep ... again, you can't fault the message so you are trying to discredit the messenger. How many time do I need to tell you that I am not a real estate agent? Are you THAT dense? or does your denial prevent you from hearing me say it over and over again that I am NOT a real estate agent. Man, you are dense!

  32. David,

    This blog is supposed to be about discussing the premise of a real estate bubble in a rational manner. Why is it you are not deleting posts such as those from Bill who first started posting in my name, and now is pulling sh*t like the above? Do you really think you're going to get both pro AND counter arguments on this blog with people like Bill and Keith around? It's not possible to discuss anything in a rational method with them on here. Do you really want your blog to degenerate into a blog where everything is discussed only from their point of view? 'Cause that's what you're soon going to have if you don't find a way to control them. Haven't you noticed how few "counter" posters you're getting? I see few new counter posters who stay on past one post ... If all you want is to hear "good" news, then don't do anything about Bill and Keith ... Just let them take over your blog as they are already doing. If you're truly open to a real discussion of the issues, then find some way of dealing with them. Thanks.

  33. "all types of lending regulations were put in place and oversite agencies/orgs established precisely to prevent a recurrance of what happened."

    Um, Lance, there is nothing new about underwriting standards. The "regulations" you are trumpeting relate to federally-backed mortgages, which were created precisely because the private sector was unable, during the depression, to provide sufficient credit - to put it mildly.

    In the final analysis, none of this had any meaningful impact on the housing markets until AFTER the second World War. The return of millions of men from military service, the availability, for the first time in years, of JOBS, and the pent up demand from over a decade of near zero housing construction laid the foundation for a housing boom that was FUNDAMENTALLY driven, Lance. Your ignorance, or denial, of history, is astounding.

    It is also understood that the "Harvard Study" you refer to was funded by the housing industry. And Mr. Greenspan has never said "there is no housing bubble," as far as I know. He never speaks in pointed terms to begin with, and has already spoken of "froth" in the housing markets, as Fed chairman, and offered a much more obtuse "history has not dealt kindly with periods of low risk premium," since leaving the Fed.

    Do you know what that means, Lance? It means that those who invest in assets that are at historically high prices do not do well, financially.

    You are adamant that you are not a real estate agent. Fine, I believe you. Read a little history and perhaps you shall be saved from the next financial episode. Apparently, it is too late for you this time around.

  34. dc_too

    Here are Greenspan's words verbatim ... "Overall, while local economies may experience significant speculative price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity," Greenspan said."

    "national severe price distortion" = bubble

    and Greenspan said there wasn't one.

    About my getting my history right ... What I said was "in response to what happened back there, all types of lending regulations were put in place and oversite agencies/orgs established precisely to prevent a recurrance of what happened." I.e., Controls were put in place to prevent large scale defaults on mortgages (and the underlying over-valuation of the properties being secured.) What on earth does the market not picking up until after World War II have to do with what I said? I wasn't talking about real estates sales going up or down, but simply about the control on modern mortages that will prevent the large scale default on mortgages that they saw back in the 20s.
    I've noticed that you bubbleheads are apt to read into what I and other counter-bubble people are saying. Is your mindset on what is going on out there so different that we aren't speaking the same language? Again, re-read what I had posted, and ask yourself how you rationally could have extended that to mean I was talking about when a recovery in real estate sales occured?

  35. dc_too said: "It is also understood that the "Harvard Study" you refer to was funded by the housing industry."

    hmmm ... did you bother to pull up the study and actually read where the funding for it came? Below are the sources identified in the study itself as principal funding sources.

    It would be more than a distortion to say that the "housing industry" includes entities such as the National League of Cities, the Housing Assistance Council, National Council of State Housing Agencies, or even Fannie Mae Foundation. And even if one were to believe that those sources of funding that ARE part of the "housing industry" such as the National Association of Realtors, could in any way dictate what the Harvard researchers "found", it still wouldn't make sense. What value to them would a study with flawed findings be to them for planning purposes? Do you go to your financial advisor and ask him/her to fudge his findings so that you can make bad decisions based on flawed findings? Discounting the findings of this study has all the hallmarks of conspiracy theorists.

    "Principal funding for this report was provided by the Ford Foundation
    and the Policy Advisory Board of the Joint Center for Housing Studies.
    Additional support was provided by:
    Fannie Mae Foundation
    Federal Home Loan Banks
    Freddie Mac
    Housing Assistance Council
    National Association of Affordable Housing Lenders
    National Association of Home Builders
    National Association of Housing and Redevelopment Officials
    National Association of Local Housing Finance Agencies
    National Association of Realtors®
    National Council of State Housing Agencies
    National Housing Conference
    National Housing Endowment
    National League of Cities
    National Low Income Housing Coalition
    National Multi Housing Council
    Research Institute for Housing America"

  36. To anon -

    For your info, I bought my condo for $500K 4 years ago and my closing costs totaled $21,250 to buy it! So I dont know what you are talking about as this is a real life example. So, to do the deal I paid $521,250..

    Now, If I sold it for $575K (at 6% commission lets say) my costs in NY would be:

    commission - $34,500
    transfer taxes - $10,500
    attorney fees - $1,500
    managing Agent Fees - $500
    Title/Recording Fees - $100
    Mortgage satsfaction fees - $300


    $575,000 - $47,400 = NET $527,600

    Now, what are YOU talking about! Prove me wrong in my example here for a condo bought in NY for $500K and sold for $575K which has a net gain of $6K..Wow, talk about breaking the bank.

    In my statement I said you needed to sell for $575K to break even, and I would consider that original statement pretty dead on. If you sold on your own or saved a few % points on commission, good for you. But chances are you will need a broker to get you top dollar in your sale.

    Perhaps you are talking about your local market in which case I would love to see you break it down as I did to prove your case. I said what I said because most buyers and sellers do not fully know what their transactyion costs are when they go to buy or sell, and rather, find out the hard way and wind up being pissed.

  37. Lance,

    David is on the record stating that this blog is premised upon the existence of a bubble. Thus, it's obvious that neither he nor the more wacko bubbleheads want to bother to engage in rational discussion of the whether a bubble exits. Instead, they take their pleasure hoping for recession, doom, gloom, and general punishment of all homeowners. They also enjoy fantising about buying the home of their dreams at 50% discount.

    People who want rational discussion should go elsewhere--and the bubbleheads will freely tell this to you. It's best not to try to question their little alternate universe here, just read the posts for the humor.

    Alright, requisite "bitter homeowner" or "realtor" retort in 3, 2, 1. . .

  38. Should you buy now? A friend of mine just bought a condo for $400k. I told him not to buy, but he gave two very good reasons why he should: 1. He would lose his $10k deposit. 2. The interest is going up. If he doesn't buy it now, he won't be able to afford it when the interest is at 8 or 9%. He thinks he will end up paying the same amount of mortgage every month. If he buys now, at least he gets to live in his own condo in the next few years instead of renting. What do you think?

  39. Johnny, you've posed this question to dubbleheads who will automatically tell you that 1) they'd never pay more than 150k for this condo, and 2) your friend should rent in Silver Spring until the market crashes.

    Undoubtedly bubblehead responders will judge your friend a fool. But of course, you've not given any information necessary for others to give you a reasoned, informed response. What's the comps? Where's the condo? How the neighborhood? What's the rental market like (for the condo purchased and where he would live sans condo purchase) What's your friend's interest rate now? How's his credit?

  40. This means home prices will go up, right?


  41. I believe it is a 3br/3ba condo in centreville, VA. He said the neighborhood is excellent. He loves it out there. He has excellent credit score. I believe it is 782. I think he told me the interest rate is 6.25%.

    That is my question. When the market crash, the interest would be about high ~ 9% or so. So low interest and higher price vs high interest and lower price, wouldn't it come out the same at the end? You should only wait until the market crashes if you are going to buy in cash. Otherwise, there are really no real benefits to wait, are there?

  42. The housing boom bitter-enders are out in force to plant seeds of doubt. The spring selling season has failed, it was a silent spring. The only ones left to cheer for housing are agents and speculators hoping for one last chance to unload their investment properties before this housing bust gets fully underway.

  43. Johnny,

    Read the Harvard study, it was conducted by EDUCATED individuals in the academic arena with no axe to grind who were funded by a broad spectrum of entitites with an interest in where prices are going. You'll read that 2 factors are necessary to bring on a decline in prices, one being a severe local recession. The chances of the Washington metro area experiencing significant price declines is close to nil. Your friend should go ahead and purchase now before prices go up. For every 1/4 point his interest rate goes up, he can expect a significant increase in his monthly mortgage payments. So, even in the very unlikely event that he is paying more for it today than he would a year down the road, the lower interest rates today most definitely make it a cheaper purchase now.

  44. anon 6:15

    yes, you are regrettably right. Trying to enlighten these bitter bubbleheads is like talking to people in the looneybin. They've latched on to a single shred of hope --- that magically housing prices will drop in isolation (i.e., their income won't be effected by the cataclysmic changes in the economy triggered by such a rapid and substantial devaluation of assets that they are predicting will occur) --- and anyone who proves to them otherwise is automatically some planted "housing industrial complex" lobbyist conspiring with the highest levels of goverment to do them in!

    I do disagree with you though about David. We exchanged emails a couple times and I found him very fair. I doubt that the stated premise that their "IS" a bubble was intentional in terms of his not being ready to hear alternative views. I may be wrong, but I didn't get the impression that he was just here looking for unquestioning validation like certain others including Bill and Keith. If I were in David's shoes, I'd be embarrassed by them. They don't help give validity to his belief that there is a housing bubble. They work against it by exposing the twisted and irrational thinking of some of those most fervently cheerleading that a bubble exists. I know that if I were in David's shoes, I would ask them to refrain from posting other than in a fair, debating-like manner because by their infantile actions they are undermining the validity of his arguments.

  45. Johnny,

    I meant to say "your friend should go ahead and purchase now before INTEREST RATES go up ... "

  46. "The spring selling season has failed, it was a silent spring."

    Where's the data?

  47. anon 8:04

    yep ... where IS the data ... I DO know that rowhouses in the District where selling for at least 20% more at the end of the first quarter this year than they were at the end of the first quarter of 2005 .... hmmm ... so, even if they stop going up in value, is someone who bought in early 2005 better off now ...let's see $500 home bought first quarter of 2004 would now sell for $600 ... wow that is a difficult one to figure ... but what if it DOES go down 15% ... wow, it's still worth $10K more than when they bought it ... So, unless they were buying it as flippers, would it really matter if the worst case scenario happened and the local economy tanked and the house sold for 15% less next year ... NO ... not a bit ... it would still be selling for more than what the person paid for it ... And, of course, how many people who buy a home to live in actually move out of it in less than 2 years? Dumb one I guess, since they also have to pay larger capital gains taxes for not waiting the 24 months ...

  48. "Where's the data?"

    This is the NAR release for 2006-Q1 Metro Prices.$FILE/REL06Q1T.pdf

    Boston is already -ve year-over-year in 2006-Q1.
    Do some digging and see for which metros the 2006-Q1 was less than their
    2005-Q2? Washington DC certainly qualifies.
    Unless WDC Median rises again from 2006-Q1 to 2006-Q2, it will be
    -ve year-over-year in 2006-Q2.

    "it's still worth $10K more than when they bought it "

    Are'nt you forgetting the realtwhore's commission, the interest
    for one year, property tax and insurance? I bet that will be
    more than 10K.

    "they were buying it as flippers"
    A good chunk of them are flippers. To put some numbers.
    Per NAR, In 2004 25% of homes sold, were purchased as second
    homes. In 2005 that number rose to 40%.


    This is an excellent source for the
    inventory explosion in several of the
    bubble markets.

    The inventory is exploding, because the
    buyers are'nt there to buy it.

  50. anon 8:55

    "second homes" doesn't equal "flipper property"

    I read somewhere just the other day (and posted the link) that there has been a recent large increase in people buying second homes 'cause those with the means to do so just have that much extra cash lying around that they can do so ... The Harvard report I was reading tonight referrenced something about Baby Boomer buying a lot more second homes.

    As for paying the realtor, the interest etc. First off, when you buy, you know there are transaction costs involved in buying/selling. That is why when people only plan on being in a place a year or two, they rent instead of buying. (As renting was intended to be ... a shortterm housing solution.) If the unforeseen happens and the guy's friend HAS to sell after only one year, yes he takes the risk of having to incur more overall than if he had rented. BUT the premise was that he was staying longterm and would only sell if the unexpected happened. There's a business calc called "weighted risk" ... you estimate the chances of something happening and multiply that by the cost if that something happens. In this case, the chance of his getting laid off or experiencing something as terrible as that is maybe 1 in 10 at worst? ... So, you'd multiply the $20k extra it would cost if the unexpected happen by 10% and get $2,000 as the expected cost. Subtract that $2,000 loss from the $10,000 gain, and he is still ahead of the game. So, from a financial viewpoint, he should go forward with the purchase. 'Course I expect to be criticized by the bubbleheads on this calc 'cause unlike myself they don't have an MBA ... no, and they don't need one 'cause they are just naturally intelligent ... which is of course proven by the fact that they are still renters ... making their landlords rich.

  51. Lance and his friends are doing their job and/or protecting their investments. Don't we all try to do so? They want to keep pushing it till they are able to sell their investments to GFs and/or keep this party going on so that they can keep making money without doing any work.
    All the theories/reports that have said that "This boom will not bust" are good in the sense that they are trying to engineer a soft landing which is going to be good economy and financial world. But it is not going to happen. Real world does not work exactly in a mathematical equation style. The only way for current prices not to collapse is "A very substantial (may be 30 to 50%) increase in earning power / salary of average population, which is not going to happen because of the fact of globalization and cheaper labor available around the world" So what is going to happen? Current prices have to drop by 30% to 50%. The name of game is patience and it will happen in next 12 to 24 months.
    If someone wants to buy go ahead and buy because every adult is supposedly capable of taking suitable decisions for himself/herself and his/her family.
    And who will be proven right? Only time will tell.

  52. "unlike myself they don't have an MBA"

    Yep. We got some thing more valuable and it is
    called common sense. Obviously they did'nt teach you
    anything about the eventual collapse of all fiat
    currencies, effects of unlimited credit expansion,
    and the discipline of gold standard in your MBA.

    Your weighted risk is nuthin but fuzzy math.
    And that is ALSO really serving the stock market bubble
    very well.

    Also borrowing against the equity of home purchased
    in 1995, to make a down payment for a home purchase
    in 2005, hardly qualifies as extra cash lying around.
    It is a DEBT.
    Anyway... Congratulations on your MBA.
    It is serving you well.

    You did'nt dare to adress any of the
    trends the data is indicating.

    Yes, anon 10:43PM.
    It is a game of patience.
    It is getting so close, though.

  53. Come on bubbleheads, keep exposing yourselves and your emotion-driven rationalizations for why everything will "crash and burn" so that you can more easily afford a house. I never realized there were so many desperate folks out there willing to lay blame for their problems at the doorsteps of others. Jealousy is an ugly emotion.

  54. "Johnny said...
    That is my question. When the market crash, the interest would be about high ~ 9% or so. So low interest and higher price vs high interest and lower price, wouldn't it come out the same at the end? You should only wait until the market crashes if you are going to buy in cash. Otherwise, there are really no real benefits to wait, are there?"

    Your point here seem's like the only valid point I've read so far. I'd still rather wait until interest rates go higher & prices go down. In my area of California prices are falling. I'd rather pay the higher interest than stuff the pockets of the greedy "realwhores"
    & sellers, they've been smug much too long. Screw'em

  55. I forgot to mention, I work in a bank that makes lots of money lending money for mortgages. I guess that if interest rates go up, they'll probably give me a raise!

  56. If rates continue to rise, you will probably get laid off.

  57. After much thought, I have decided to end this blog on Monday due to several posters' refusal to stop posting under other posters' names and a general dropoff in quality of postings. I appreciate all those who have tried to make this blog a great and informative place.

  58. Too bad you couldn't control your own blog... This is the type of news housing cheerleaderes love to hear.

    We'll just go elsewhere to stay informed. Best of luck to you.

  59. David,

    I'm sorry to see you shut this down, however I guess I would do the same if in your shoes.


    It's inflammatory words such as "This is the type of news housing cheerleaderes love to hear" that have turned this from a blog where one could have rational discussions to where it was no longer possible. It's almost as if you wanted to see this blog shut down. Who are you really?

  60. David,

    I was just thinking ... I'm pretty sure that the blog application that "Inside the DC Bubble" uses allows the blog owner to see who is posting (i.e., IP addresses or the like.) Maybe using that application for your blog would be a solution for your problem here?

  61. David,

    Check out the Northern Virginia blog. It requires posters to be registered in "blog". I.e., no anonymous posters and no posters posting under others identities. It's the same application you are using for your blog, so there must be a way of having your blog have similar restrictions on who can post.

  62. Bitter homedebtors and desparate RE agents have ruined this blog. Soon the housing burst will ruin them and they will be sleeping under bridges and in bushes while robbing tourists at metro stops to feed their impoverished and broken families.

  63. Gaston,

    It's posters like you who ruined this blog. Rather than rationally debate the merits of a bubble, you have spewed hate like your last posting .... hate that doesn't reflect well on your real reasons for posting here. Jealousy is not a pretty emotion. It is also destroys the person who holds it in their heart. It has no effect on those it is directed towards. Peace, good luck. Learn to have enough hope in yourself that you don't need to hope for others to be hurt so that you can make it yourself. Think about karma.

  64. David,

    where the F*** did my comment go? This is the reason your blog as taken a nose-dive. Delete button mania.

  65. David,
    Why care about idiots like RE cheerleaders. Although I frequently visit and I think that that site is the best site for exposing these RE cheerleaders and guiding general people in not becoming GFs/FBs, your blog/site also is valuable in the overall picture of this RE scam of last 5 years. People who have vested interest will try to disrupt anything that is exposing them but we should not do what they want us to do i.e. stop exposing them.

  66. lance,

    "emotion-driven rationalizations"

    It is based on solid data.
    Zero emotion.

    Please adress the data presented.
    Phoenix inventory up 175%.
    Boston median 1.5% down.

  67. Come on David.
    Dont shut this down.
    I am sure you can have a better control
    of who posts.
    Ben Jones takes a heavy handed approach
    on his blog. I think that's what is needed.
    You can permanently disallow certain
    troll names from posting and prolly
    disallow anonymous postings.

  68. lance,

    This is an objective discussion of a
    historic economic phenomenon.

    You can bury your head in the sand
    and pretend there is no tsunami.
    But the others are warning you and
    they are heading to higher ground

    Consider yourselves warned.

  69. "You can permanently disallow certain
    troll names from posting and prolly
    disallow anonymous postings."

    How do I do that?

  70. David,

    Ask the blog guy at the NOVA blog how to disallow certain posters. His site is set up such that you have to register with Blog before posting ... which I did this morning. From now on, you should be able to tell if it is me or not in that my name should be in blue and underlined. Forcing people to post under their own names will make them more responsible for what they are saying.

  71. David. I dont know exactly how.
    I dont have a blog.
    But I am sure somewhere in the
    settings/options you can set that up.

  72. anon 10:28

    "You can bury your head in the sand and pretend there is no tsunami. But the others are warning you and they are heading to higher ground themselves."

    those telling me that are basing it on their own non-professional interpretation of the data (and I'm only talking about the rational folks now ... I'm not talking about the likes of Bill or Keith whose positions ARE based on their emotional and irrational responses to feeling "locked out" from buying a house. and please don't try to convince me otherwise, people don't act they they have acting if they are not basing their actions on pure jealousy or some other irrational hatred. i mean calling real estate agents "realt-whores" ... what kind of professional, non-10 year old individual would engage in that type of anti-social behaviour?) now, i am looking at what trusted and respected organizations like Harvard and that other posted study are telling me. I'm also basing it on my own experience. I don't have a duck in this fight. I got my place for somewhat undermarket, I put down a boatload of cash I'd gotten from selling my condo, and I have 2 rentals in the property that essentially pay my mortgage. so, again, i have no stake in this. i have even said that i agree that prices are going to go down somewhat ... especially for condos. i wouldn't be surprised if condos go down as much as 20% by next spring. all i'm saying is that it's not going to be to the magnitude of 50%. that just makes no sense 'cause if that happened, then this country's economy will have just collapsed and you better be learning Farsi or Arabic. It is just not possible for the country to sustain such a shock. And at that point, no matter where prices dropped to, you wouldn't be able to afford anything 'cause you would be unemployed ... at least until you learned to speak Farsi or Arabic and got a job working for the powers that be. But that just isn't going to happen. This isn't 1925 ... We have all kinds of controls in place. Prices went up for a very simple reason ... there is a lot of money around at the moment ... albeit it in very few hands. Yes, the result of 8 years of Reagan and now something like 10 years of Bushes have left us a very divided country economically. If you find it hard to buy it is because you have fallen on the wrong side of the divide. The rich are getting richer and the poor are getting poorer. There's a reason so many houses are paid for free and clear and why there are so many free and clear second homes (something like 78% from the link I posted last week.) Less and less people are getting more and more money to spend. So no, YOU can't afford to buy in Washington, but that is only because there are other folks who can afford to buy much much more than you can. You can waste your time rallying against real estate agents or homeowners, but it won't do you an iota of good. If you really want to help the situation of those disenfranchised of houses like yourself, then you need to get involved politically and help change the political landscape to one where everyone's contrirbutions are valued and not just "survival of the fittest" as we have currently. But I understand, it's just a lot easier to blame the "sympthoms" you see all around you than working to change the underlying cause.

  73. lance,

    You are again using the "Too Big Too Fail" argument.

    Yes, I do believe the US is heading into a Depression.
    It is not 1925. 2006 Is much worse than that.

    The cash out refinancing of homes, which has put the
    US consumer in a spending binge is coming to a screeching
    halt this year into the next.

    An economy that is 70% consumer spending derived from
    debt, which must be paid back, will be unable to survive this

    This is the underlying cause, you are the one looking
    at the symptoms only.

    The odds of job loss is 1 in 2, not 1 in 10.

    And once again, please address the data.

  74. anon 11:44

    thank you for a rational post. Have you accounted for globalization in your forecast? i.e., in the fact that for the wealthiest people and corporations, national boundaries have essentially disappeared? that for them --- with the buld of of their employees in Bangladore or the like --- whether Detroit goes under or not is irrelevant? that to look at "national" markets for trends and the like makes no sense where markets are now global?

    just a thought ...

  75. "Johnny said...
    That is my question. When the market crash, the interest would be about high ~ 9% or so. So low interest and higher price vs high interest and lower price, wouldn't it come out the same at the end? You should only wait until the market crashes if you are going to buy in cash. Otherwise, there are really no real benefits to wait, are there?"

    Your point here seem's like the only valid point I've read so far. ...

    I don't think it's a valid point at all. If prices drop, how am I going to sell my 500K house when in a 9% rate environment comparables currently sell for 350K?

    Basically, if you overpay b/c of low interest rates you had better be sure you plan on holding the house for a while. I would much rather pay 15% at a low price and refinance later

    IMO, the only winners in this game were those who bought in the 2001 time frame before prices really took off and rates where low.

  76. "Have you accounted for globalization in your forecast?"

    Yes, lance I have. Bangalore and Shanghai are booming from the
    US consumer spending binge, and the gross over valuation of the
    US Dollar.

    Both are coming to an end very soon.

  77. Lance - "and please don't try to convince me otherwise"

    That pretty much sums Lance up. He can't even handle evidence that's contrary to his view. As we see time after time, Lance makes the same tired arguments over and over, ignores the massive evidence and logical flaws when they're pointed out to him, and complains about the people who see through his sleazy debate tactics.

    King Solomon spoke of people like Lance thousands of years ago, when he wrote:

    "As a dog that returns to his vomit, so is a fool who repeats his folly." Proverbs 26:11

    By the way, for a guy with so much access to those wonderful DC amenities, Lance sure spends a lot of time posting here.

    "I wouldn't be surprised if condos go down as much as 20% by next spring."

    Wow, quite a change in gears. Now Lance agrees with me.

    Unlike Lance, I don't try to make David delete the posts of those who disagree with me. Heck, I don't even complain about some of the fake posts in my name, because they show so perfectly the juvenile attitudes of Lance and others like him.

    In Lance's case, his posts just help me, and make me look better. I just let him hang himself with his own rope. If Lance really wanted to help himself, he'd have David delete his own posts; posts like this:

    "it supports my point from yesterday that that McMansions in the outer burbs and exurbs are "out" and smaller (and closer-in) homes in the innerburbs and District are "in"."

    Of course, according to the MRIS, the median DC housing price declined from May 2005 to May 2006. We actually discussed this in the past on this blog. Lance, being Lance, ignores this, and covers his deliberate and willful ignorance with a statement about what's "out" and what's "in," treating financial decisions like a Maureen Dowd column. Because that's all he's got.

  78. Lance -"if you're so bright, why are you still a bitter renter"

    Reply: Because renting makes sense and buying doesn't in today's environment, thus making me a joyous renter.

    Lance - "now I'm going to call you names. And they'll be the same names I've called you before because I'm not even creative in my nastiness."

  79. Keith,

    Read the reports from Harvard and UCLA ... and see what Greenspan had to say about a "bubble". It was a unanimous "there isn't a bubble."

    You've yet to quote one impartial group or person making a case for a bubble.

    And you are againing resorting to personal attacks because you have nothing of substance to offer.

    But you know what? It really doesn't matter. If you really want to believe that it's the world that's messed up ... and not your own personal finances, then go ahead and keep believing that. And when the deluge comes, you'll be the lone survivor of the economic flood that follows and be the one to profit from others' misery and loss. Yep, that's one great vision you have there! Your parents must be really proud of you!


    Thursday, June 1

    During the three-month period ending March 31, DC housing prices jumped ... ok not jumped ... but rose 1.47 percent, according to the Office of Federal Housing Enterprise Oversight. Over a one-year period, prices were up a much sharper 20.84 percnet, said the OFHEO.

    Most striking though is the fact that houses have gone up about 5.2 times their value since 1980. This statistic illustrates the paradym shift that has happened here in DC over the last 25 years or so. As a point of comparison, over the same period homes in the state of Virginia went up only 3.5 times their value and homes in Maryland rose four times their value.

    In a nutshell, the paradigm shift argument states that capital disproportionally shifted to DC over the past few decades as the city revived and gentrified. Contrary to the title of this blog, the housing market in D.C. is not a bubble waiting to burst.

    posted by dcbubble at 2:12 PM

  81. Lance, as people pointed out on the DC Bubble blog, OFHEO's study has serious sample selection problems, because OFHEO does not count sales at prices above approximately 400K. And yet you repeat the study results, even after people pointed those flaws out to you. Really, you either have serious memory problems, or you're seriously kidding yourself.

    And you have no reply to the MRIS data, which is far more comprehensive than OFHEO. You're like a hamster on its wheel.

    I did read the Harvard report. I don't think there's any conspiracy behind it. I just think that funders favor researchers who agree with them, so the study represents the most optimistic view that isn't totally crazy. But the study does not use the latest data that shows exploding inventories reaching a tipping point (likely because it had to wrap up well ahead of its release date for purposes of internal review), and does not adequately factor in the effect of resetting ARMs on future inventories.

    Finally, as I pointed out on that blog, DC Bubble makes the mistake of conflating all of Virginia with Northern VA and all of Maryland with the DC area of Maryland in his comparison of housing prices. Again, you keep repeating the same bad arguments even after they're disproved.

    Lance in a nutshell - Same bad arguments, same irrational hostility at people who point out the problems with his bad arguments, same massive insecurities on display for all to see.