PDA

View Full Version : housing: a bottom is emerging




Seraphim
03-23-2012, 11:34 AM
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/03/New%20Homes%20for%20Sale.jpg

I'm NOT saying that housing won't go lower (it probably will)....


But American real estate is going to hit a bottom relatively soon. Solid down payment, fixed rate, a house you can AFFORD.

I think the end is near for the housing crash.

Commercial real estate? The blood bath is right around the corner....

Pennsylvania
03-23-2012, 11:37 AM
Wouldn't interest rates have to rise drastically for an actual bottom to occur?

Original_Intent
03-23-2012, 11:41 AM
And wouldn't all the banks foreclosures have to be put on the market and drive prices to reality to get rid of the months and months of inventory out there?

Seraphim
03-23-2012, 11:42 AM
Rates won't rise drastically without triggering hyperinflation.

Bond "vigilantes" may or may not force rates up in the short term...but The Fed will simply continue QE type bond programs.

Interest rates CANNOT reach double digits without BANKRUPTING the US Government. They WILL not let it happen. They WILL obliterate the currency before an outright default occurs.

This is why I'm saying a bottom is NEARING.

Once this shit storm of inflation/hyperinflation occurs, hard assets - real estate included....will be the saving grace of the working class who THINK.

It's a matter of MATH.

The Fed CANNOT raise rates to 21% (or whatever) like 1980 to save the currency. It will bankrupt their own government (AND BANKS). 11% rates (plus or minus a bit, and that number is LOWERING) would bankrupt the GOVT.


Wouldn't interest rates have to rise drastically for an actual bottom to occur?

Seraphim
03-23-2012, 11:49 AM
Silver, for example, is still a MUCH better investment...BUT...if you are a budding family and need a home...As long as you have a real downpayment (20+ %)...Find a steal of a deal somewhere...Buy LESS than your creditors say you can afford, fix the rate..and you'll be fine.

Sullivan*
03-23-2012, 12:16 PM
Anybody really good at this kind of stuff have any guidance on refinancing?

xFiFtyOnE
03-23-2012, 12:18 PM
Silver, for example, is still a MUCH better investment...BUT...if you are a budding family and need a home...As long as you have a real downpayment (20+ %)...Find a steal of a deal somewhere...Buy LESS than your creditors say you can afford, fix the rate..and you'll be fine.

Might I add ALOT LESS to that statement. I bought my first house a few years ago and could not believe what they approved me for...I'm allready struggling with cash now, I can't imagine what it would be like if I spent all the cash the nice banks were trying to get me to spend!

ctiger2
03-23-2012, 12:24 PM
Housing will have hit bottom when prices are at 1995 levels or LOWER.

But in reality, no one knows anything. : )

psi2941
03-23-2012, 01:14 PM
no wait it has hit rock bottom.

3.5% down payment is still going on (FHA loan)

interest rates are lowest has been in decades. I just saw a commercial for 3.85%

most of the new loans are still government secured loans.

however yea in terms of dollars it may go up but in terms of real shit like corn, gold, oil it got too much way to go down.

Housing will have hit bottom when prices are at 1995 levels or LOWER.

i agree with you but peter schiff would argue in a market nothing swings one way and stop at the dead middle. it usually swings to the other way before it settles in the middle.

Lafayette
03-23-2012, 01:22 PM
Housing will not hit bottom until the millions of properties that are in or will be going into foreclosure are settled, the FED, banks and GSE's clear their books of the trillions worth of crap loans, and housing prices return to normal levels. In other words, not anytime soon.

Wait till the commercial property defaults start to hit...:eek:

Acala
03-23-2012, 01:25 PM
Housing will not hit bottom until the millions of properties that are in or will be going into foreclosure are settled, the FED, banks and GSE's clear their books of the trillions worth of crap loans, and housing prices return to normal levels. In other words, not anytime soon.

Wait till the commercial property defaults start to hit...:eek:

Agreed. Unless what is meant is that inflation-driven price increases that say nothing about actual value start to happen. That is possible, but certainly not an indicator to buy.

Brian4Liberty
03-23-2012, 01:53 PM
And wouldn't all the banks foreclosures have to be put on the market and drive prices to reality to get rid of the months and months of inventory out there?


Housing will not hit bottom until the millions of properties that are in or will be going into foreclosure are settled, the FED, banks and GSE's clear their books of the trillions worth of crap loans, and housing prices return to normal levels. In other words, not anytime soon.

Wait till the commercial property defaults start to hit...:eek:

All true.

But they have constrained inventory to a point where houses are getting difficult to buy in some areas. There are bidding wars going on right now, mostly investors (and investment groups) taking advantage of cheap money and cheap houses. Houses are getting multiple bids above asking price within hours of listing the house.

Goldman Sachs wants all of those government owned foreclosures, and they will continue to pretend that the houses can't be sold.

Zippyjuan
03-24-2012, 12:05 PM
Wouldn't interest rates have to rise drastically for an actual bottom to occur?

Rising interest rates would be a negative as far as housing prices go- higher interest rates means that a buyer with a certain income level could only afford a less expensive house if rates rise becasuse higher rates mean higher payments. High interest rates will not signal a bottom but would send prices even lower again probably.

Zippyjuan
03-24-2012, 12:18 PM
Anybody really good at this kind of stuff have any guidance on refinancing?

Find out how much the refinance will cost you (a lender may try to say you will have no out of pocket costs but that means that they are adding the costs of the refi to your new loan balance). Next, calculate how much you will be saving on your monthly payment for the new loan vs the current one. Divide the costs by the savings per month and this gets you your "break even" time frame (how long it will take you to get back in savings what it cost you to refi). The lower, the better. How long is good for that would be up to you. A couple of other things to consider. One- how long have you had your present loan already? The longer you have a loan, the higher percent of your payment going to reducing the principle. The longer you have had the loan, the less sense it makes to refi. This also references the second- do you want to do a shorter term on the refi? Taking a 15% loan instead of another 30 year would mean the loan gets paid off in a shorter time frame which reduces the total interest you end up paying over the life of the loan. If there is enough of a difference between current rates and what you are paying, you could end up with a shorter term loan at lower payments. You will have to run the numbers yourself to see what will be best for you.

The last time I did a refi I could have afforded a 15 year but went with a 30 to keep my payments lower- the 15 would have made my financial situation tighter. Keeping them lower gives me more flexiblity in the event of some financial crisis. That was useful when my company went on strike for five long months and I was able to keep up on my payments and not put my home in jeopardy. I am still able (and have been taking advantage of) to make extra payments towards principle to reduce my balance and the time to pay off the loan.

Carson
03-24-2012, 12:53 PM
I calculated out housing prices once like they were a commodity like silver or gasoline. I then adjusted it against those prices. It was tough to tell a bottom because of such a wide range in fluctuation on the rise up because of location. I don't think it is anywhere near there yet though.

I suppose I could try it again. I was very crude in my estimates and also very limited in the other resource commodities I used.

Here is another crude estimate for a $13,000 house in San Diego. I'm thinking that was the price in the fifties or sixties. When the bubble was in full tilt I remember seeing them running about $550,000 (Plus it's now fifty years old)( A lot of a house price is the value of the land. That should also be considered in a real estimate).

This time, just because the math is simple, lets multiply the price by about the number of times they have counterfeited the entire money supply to dictate their way with us.

$13,000 times 26 equals $338,000.00

http://photos.imageevent.com/stokeybob/followthemoney/RobertSahrcurrencyvalue.jpg

P.S. Actually I can't really tell how many times they have counterfeited the money supply. I reality if you double the amount of stuff the supply represents you could, I would imagine, double the supply and have no inflation or deflation showing against the currency.

Still 26 times is okay for me right now. It seems as good as any other numbers coming out. Probably better.


P.S. P.S. With more stuff it would be much higher than 26 times.

Zippyjuan
03-24-2012, 01:17 PM
A couple of ways to look at it:

Existing housing prices in terms of gold: ( should be noted that after the bubble the price of gold rose while the prices of houses fell- the price of gold was falling from 1980 through about 2002 while housing prices were rising)
http://goldnews.bullionvault.com/files/housing_gold_US_2.png
http://goldnews.bullionvault.com/housing_gold_ratio_050220093

Nominal and Inflation adjusted housing prices- looks like we are crossing the trend line (over- correction is not uncommon for prices):
http://www.jparsons.net/housingbubble/

http://www.jparsons.net/housingbubble/united_states.png

oyarde
03-24-2012, 02:01 PM
I do not think we are anywhere near the bottom , I would not let that stop me from buying one to livein , but not anything else

oyarde
03-24-2012, 02:04 PM
I do not think we are anywhere near the bottom , I would not let that stop me from buying one to live in , but not anything else.

Zippyjuan
03-24-2012, 02:10 PM
Interest rates are pretty incredible now. If I did not already own, I would be looking - and definately not do anything with an adjustable loan (not usually a good idea in any times). Lock it in! Anybody "waiting for the bottom" will end up missing it. Bottoms are only known after they have passed though housing prices move much more slowly than other commodities like say precious metals.

wgadget
03-24-2012, 02:16 PM
I heard on Bloomberg radio yesterday that by 2023, home prices will be at the same levels they were before the housing crash. :eek:

Not sure if that will be due to inflation or what. Hmm.

seapilot
03-24-2012, 03:34 PM
Housing is going to go up not because its more valuable but because its measured against a falling dollar value. The value of a house in 2005-2006 when the dollar was stronger currency is going to be a lot less valued in the same amount of that same currency today. The people that invested in housing in those years will never fully recoup the original value and that is not even taking into consideration interest owed to banks and maintenance costs for material is higher. Its a double whammy of deflation of housing while the inflation of the currency. The inflation of the currency is masking the full deflation the housing bubble has taken. If a bottom is now it is because deflation of the housing market is overtaken by the inflation of the currency.

LibForestPaul
03-24-2012, 03:53 PM
It is hard to even define what a bottom is.

I will use cost of median home ownership vs median household income.
This is where the trick lies.

So a home is purchased for 300k at 3.5% with 60k down (no pmi).
1) interests rate stagnate. So what would cause home prices to spike?
2) interests rate go up slowly. Home prices will?
3) interests rate spike up. Home prices will plummet as principal + interest is out of reach for mundane (what actually happens to fiat money is at best a guess. i.e. Just because mundanes can not purchase does not mean well connected REIT can not purchase?)
4) property tax rates are on assessed value. New purchases as well as improvements usually trigger re-assement no? This factors into total cost of home ownership,no ?
5)regional employment market. i.e. Will San Fran always be tech hub? What happens if tech crashes to home prices?
6)occupational outlook.

too many variables, and too much pieces which have and will continue to be manipulated.
Best bet...self-assessment.
i.e. % of tcho (total cost of home ownership) vs actual median household income including risks (i.e. Dual earnings becoming single, tax rates, regional employment outlook, occupation outlook) being kept to a minimum. When that number does not appear to be going lower, and the appropriate risks have been identified and analysed as best as possible (perhaps a GOOD CFP may help) than a bottom has been reached.

Good luck! If anyone knows how to go about to analyse and quantify these data facets, let me know, curious myself.

Zippyjuan
03-24-2012, 04:05 PM
I would make it simpler. If you find a home you like and can afford (include interest payments, property tax, upkeep, any homeowners fees) and intend to stay in it for several years, go for it.

If you wait, you risk prices going up (or down though we may be nearing a bottom) or interest rates going up (cost of borrowing which will raise what it costs you to borrow- rates are at record lows so most likely direction will be up). If you wait until the economy is better, you will be facing more competition for purchase as well.

I live in California where my property taxes depend on what I paid for my property- not what my neighbor paid for his this year so rising property values in my area will not raise my property taxes.

And buying now vs a couple years from now means that it will be paid for a couple of years earlier than if you wait (and stay in it long enough to pay off).

With more people becoming renters, rents have been rising so the chances that you can find a place to own for perhaps not much more than you currently pay to rent may be pretty good (will depend on where you live).

cubical
03-24-2012, 09:27 PM
I am waiting for the banks to start to fail(again) and buying their foreclosures at pennies on the dollar as their homes are sold to TRY to make DEPOSITORS whole.

wgadget
03-24-2012, 10:01 PM
If you go to Marketwatch.com there are a couple of Top Stories that indicate the central bankers are having second thought about all the "easing" they've done. It's almost as if they're admitting Ron Paul could be right. Of course they never mention his name. Look for the story about Trichet.

Seraphim
03-25-2012, 08:00 AM
No they do not have any second thoughts about it. No easing = rates spike and BANKS + GOVERNMENTS GO BRANKRUPT.

Qe to infinity or MASSIVE INSTITUTIONAL BANKRUPTCY.

Do you really think these kleptocracts will relinquish their power/counterfitting operation so easily? Sure, maybe one or two do not like what's going on, but as a "club" - they don't give a fuck about you or me, or justice.

You should make physical and psychological preparations for the shit storm of money printing that is going on EVERY DAY and will ESCALATE.

The next big discovered crack in the foundation will lead to the biggest QE type operation the world has ever seen. It's either that or the US Govt and prominent Euro governments DEFAULT in spectaculiar OUTRIGHT fashion. Will. Not. Happen.




If you go to Marketwatch.com there are a couple of Top Stories that indicate the central bankers are having second thought about all the "easing" they've done. It's almost as if they're admitting Ron Paul could be right. Of course they never mention his name. Look for the story about Trichet.

Carson
03-25-2012, 06:56 PM
If you go to Marketwatch.com there are a couple of Top Stories that indicate the central bankers are having second thought about all the "easing" they've done. It's almost as if they're admitting Ron Paul could be right. Of course they never mention his name. Look for the story about Trichet.


Hee Hee. Well I think he is right.

Nice hat by the way.


Have you heard people say, "No one is lending money!".

I was thinking of opening a savings account. Do you have any idea how much bread I can rake-in making the banks a loan. It was around 0.01% APR.

BWA-HAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH A!!!

*takes breath*

HAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH A!!!


Hang one a minute! Let me go through the sofa!


I had no idea. When I grew up the banks wanted your money so they could loan it out. Now a real bank with real money can no longer compete with the ones loaning out the fresh counterfeit. How could they even think of competing. It they lose their money they have lost their money. If the ones lending the fake stuff get stiffed they seem to be printing themselves up some more to cover their losses and stiffing us with the bill.

We have done in the economy in oh so many ways!

Adrock
03-25-2012, 08:26 PM
Good article on the subject.

LINK (http://reason.com/archives/2012/03/23/no-this-is-not-a-housing-recovery)

Jordan
03-25-2012, 09:45 PM
For the inflationists: Purchasing a home should make more sense to you than just about anyone. When you look at it, a 30-year fixed mortgage at today's low mortgage rates is a cool way to essentially lock in the cost of "rent" for the next 30 years, regardless of inflation.

cubical
03-25-2012, 10:34 PM
For the inflationists: Purchasing a home should make more sense to you than just about anyone. When you look at it, a 30-year fixed mortgage at today's low mortgage rates is a cool way to essentially lock in the cost of "rent" for the next 30 years, regardless of inflation.

What happens to large credit items when rates rise at a rapid pace?

oyarde
03-25-2012, 10:57 PM
What happens to large credit items when rates rise at a rapid pace? Looking at the seventies , nobody buys them ...

thoughtomator
03-25-2012, 11:37 PM
The problem with locking in for 30 years is that we really have no idea how the madmen controlling our money will make the economy lurch back and forth in three decades - just review the last three.

As far as a housing bottom goes... no chance. Shadow inventory is higher than ever, and at some point the banks will need to unload, as their accounting fraud can't make up for a lack of actual cash when the electricity bill comes due. Interest rates, of course, have nowhere to go but up.

rockerrockstar
03-26-2012, 01:51 AM
Not sure its hit the bottom yet. Depends if we have a double dip or not. Also, with the politicians and the fed manipulating things not sure how things will end up. My guess is that sooner or later it will go lower. But they are doing everything they can to prop it up currently. My guess is we have not hit the bottom because the economy and jobs are not coming back fast enough. You need a stable job long enough to have good enough credit to get a loan. Many people have been devastated by the depression and it will take a while for them to get back on the housing market. We need a more stable job market and growth for years for the housing market to really rebound is my guess. If the economy continues to improve the housing market should too.

airborne373
03-26-2012, 07:52 AM
Wouldn't interest rates have to rise drastically for an actual bottom to occur?

Good point.

I was involved in real estate, mostly as a large production builder. Those days are over. There is room for residential real estate to fall. Particularly in states like California, Texas and Florida which I believe to be 10 to 25% overvalued as of today. The poster is correct the commercial real estate market went over the cliff this Winter and will be sliding down all summer and beyond.

This is neither good or bad. But an opportunity for those who are awake imho.

P.S. The residential market may get a dead cat bounce plus the next few months is tax return time and housing sales will increase as a result, for a time.

tremendoustie
03-26-2012, 08:37 AM
Wouldn't interest rates have to rise drastically for an actual bottom to occur?

Actually, higher interest rates would mean lower prices on properties. Think about it -- higher interest rates means people are less likely to buy.

However, I don't believe interest rates will go up significantly until inflation forces them up -- and inflation means rising prices.

So, I do think now is a good time to buy.

speciallyblend
03-26-2012, 09:07 AM
the faster the banks steal the houses from folks. The better the banks are screwing the country. People are losing homes they could afford but the banks are feeing folks to the point of walking away or unwilling to help working folks!

Zippyjuan
03-26-2012, 03:08 PM
What happens to large credit items when rates rise at a rapid pace?

Higher rates would increase the cost of borrowing which would mean that on the same income you could afford less of a house (or a less expensive one)- that would put downward pressure on prices. If you bought today and got a fixed rate loan you are locked in and in great shape.

One should keep in mind that if there is high inflation and high interest rates, rental rates will probably also be rising. If you buy and lock in, you avoid that risk as well.

Liberty74
03-26-2012, 03:56 PM
Housing will not hit bottom until the millions of properties that are in or will be going into foreclosure are settled, the FED, banks and GSE's clear their books of the trillions worth of crap loans, and housing prices return to normal levels. In other words, not anytime soon.

Wait till the commercial property defaults start to hit...:eek:

I would also add ending the IRS which adds about 20% to the value of a home through the tax code. Basically meaning, you paid too much and your interest being paid is too much - wealth stealing going on by the government. Most people really don't benefit from the write off their mortgage today anyways. Rather, the biggest beneficiaries are those that mainly itemize - 80% of home owner deductions goes to top 20% of income earners.

Right now the government has done everything possible to prop up home values from keeping the free market bottom from actually being reached.

Seraphim
03-26-2012, 04:36 PM
http://www.zerohedge.com/contributed/2012-13-26/another-sign-bottom-behind-house-sales-contracts-rise-14

More evidence - some of the anecdotal comments are also worth reading.

Seraphim
03-26-2012, 04:40 PM
As stated in the OP...I do NOT think US housing has hit it's absolute bottom. But it is getting relatively close. If you play your cards right there are a TON of fantastic opportunities to be had.

cubical
03-26-2012, 06:07 PM
Higher rates would increase the cost of borrowing which would mean that on the same income you could afford less of a house (or a less expensive one)- that would put downward pressure on prices. If you bought today and got a fixed rate loan you are locked in and in great shape.

One should keep in mind that if there is high inflation and high interest rates, rental rates will probably also be rising. If you buy and lock in, you avoid that risk as well.

Though if I believe gold will be appreciating, it would be much smarter to wait for housing prices to fall and pay mostly cash for the home rather than pay a higher price with a lower rate. It is simply a matter of how much you believe gold will appreciate vs home prices. I believe large credit items will fall in price and collapse in real terms.

Zippyjuan
03-26-2012, 08:01 PM
There is another cost to waiting. Le't say you delayed purchasing a home for five years. That means it will also be five years later before you have the place paid off and aside from property taxes avoid nearly all other housing costs so basically renting for five more years. Say a rental for you would be $1,000 a month. That would mean $60,000 more in expenses you would end up paying by waiting for five years. Opportunity costs. The higher the rent you pay of course the higher these costs would be for you. You also face interest rate risk- if rates go up, you will end up paying more for the exact same house. Given that rates are as low as they have been, that risk is fairly high in my opinion.

psi2941
03-26-2012, 08:10 PM
I would make it simpler. If you find a home you like and can afford (include interest payments, property tax, upkeep, any homeowners fees) and intend to stay in it for several years, go for it.

If you wait, you risk prices going up (or down though we may be nearing a bottom) or interest rates going up (cost of borrowing which will raise what it costs you to borrow- rates are at record lows so most likely direction will be up). If you wait until the economy is better, you will be facing more competition for purchase as well.

I live in California where my property taxes depend on what I paid for my property- not what my neighbor paid for his this year so rising property values in my area will not raise my property taxes.

And buying now vs a couple years from now means that it will be paid for a couple of years earlier than if you wait (and stay in it long enough to pay off).

With more people becoming renters, rents have been rising so the chances that you can find a place to own for perhaps not much more than you currently pay to rent may be pretty good (will depend on where you live).

Zippyjuan u make great points, that is usually/always enough for me to not logging and post something.

+1

anyways zippyjuan hit the nail in the head, however i do feel home prices in terms of real money will continue to decline until it fully swings to the other end of the spectrum.

cubical
03-26-2012, 08:30 PM
There is another cost to waiting. Le't say you delayed purchasing a home for five years. That means it will also be five years later before you have the place paid off and aside from property taxes avoid nearly all other housing costs so basically renting for five more years. Say a rental for you would be $1,000 a month. That would mean $60,000 more in expenses you would end up paying by waiting for five years. Opportunity costs. The higher the rent you pay of course the higher these costs would be for you. You also face interest rate risk- if rates go up, you will end up paying more for the exact same house. Given that rates are as low as they have been, that risk is fairly high in my opinion.

60k isn't much considering the last several years home lost 30-70% not to mention you have no closing costs, no taxes to deal with, you can move without having to worry about selling(and paying fees again) and you also don't have to put down anything. If you put down 20% on a 300k home that's 60k. I would much rather put that in gold and silver and wait 3 or 4 years.

I am certain banks will go bust again and all these foreclosures on their books will be liquidated. That is when I will be buying rental properties.

cubical
03-26-2012, 08:32 PM
and I am not saying its stupid to buy a home now(to live in). I think with rates as low as they are, if you can get a good deal, its not a terrible idea.

Jordan
03-26-2012, 08:33 PM
What happens to large credit items when rates rise at a rapid pace?

First, "when" should be replaced with "if."

Secondly, not all that much. Look at the current spreads between rental yields and housing costs and it's very clear that there would have to be a very large increase in rates for the spread to be zeroed out. Also, supply in the real estate market is limited until markets can support prices above the cost of replacement.

This is a perfect example of an asset that can't be created out of thin air. It takes more resources to build a new home than to buy an existing home. This should be an Austrian's favorite investment!

Zippyjuan
03-26-2012, 08:54 PM
60k isn't much considering the last several years home lost 30-70% not to mention you have no closing costs, no taxes to deal with, you can move without having to worry about selling(and paying fees again) and you also don't have to put down anything. If you put down 20% on a 300k home that's 60k. I would much rather put that in gold and silver and wait 3 or 4 years.

I am certain banks will go bust again and all these foreclosures on their books will be liquidated. That is when I will be buying rental properties.

You are right. People need to decide for themselves when they think a good time to buy is. For me, I think this is a rare opportunity. Remember one of the lessons of the bubble- a bad time to buy is when everybody else is buying and a good time is when nobody else is.

If the numbers make sense- whether that is buying a place to live in yourself or a place to rent out- then that is a good time to buy. If you can pick up a place at a price you can rent it out and make money then why wait? You will have that much more time to collect the revenue than waiting. If you can't get enough rent for it (and rents are high and rising due to high demand for rentals now while purchase prices have gone down) then don't.

Everybody must decide for themselves if it makes sense.

cubical
03-26-2012, 11:10 PM
First, "when" should be replaced with "if."

Secondly, not all that much. Look at the current spreads between rental yields and housing costs and it's very clear that there would have to be a very large increase in rates for the spread to be zeroed out. Also, supply in the real estate market is limited until markets can support prices above the cost of replacement.

This is a perfect example of an asset that can't be created out of thin air. It takes more resources to build a new home than to buy an existing home. This should be an Austrian's favorite investment!

If you believe rates will stay low until 2014 I suppose you and I are worlds apart.

Supply is limited, but that means nothing as that is always the case. There is a glut of homes still on the market.

Tulip bulbs can't be created out of thin air either, doesn't mean Austrian economics is steering me towards them.

Zippyjuan
03-26-2012, 11:26 PM
If you believe rates will stay low until 2014 I suppose you and I are worlds apart.

Supply is limited, but that means nothing as that is always the case. There is a glut of homes still on the market.

Tulip bulbs can't be created out of thin air either, doesn't mean Austrian economics is steering me towards them.

Which makes it more of a buyers market.

Brian4Liberty
03-27-2012, 12:07 AM
Which makes it more of a buyers market.

Depends on the area.

Indy Vidual
03-27-2012, 12:34 AM
Housing will not hit bottom until the millions of properties that are in or will be going into foreclosure are settled, the FED, banks and GSE's clear their books of the trillions worth of crap loans, and housing prices return to normal levels. In other words, not anytime soon.

Wait till the commercial property defaults start to hit...:eek:

True, but...
Property prices could bottom and head higher if the Dollar continues to fall, while Real Estate/Gold or Real Estate/Silver continues to favor PM's.

airborne373
03-27-2012, 06:38 AM
http://www.zerohedge.com/contributed/2012-13-26/another-sign-bottom-behind-house-sales-contracts-rise-14

More evidence - some of the anecdotal comments are also worth reading.

imho:

The above zerohedge article reflects a "dead cat bounce" bolstered by tax season which is the buying season in housing. Combine falling prices with the lowest interest rates in our time and there is activity in the market. People need a home to live in, the real reason for buying and owning a home. This need for a roof, low interest rates, high inventory and lower prices and sellers willing to pay the majority of costs is producing a temporary bounce.

Brian4Liberty
03-27-2012, 12:05 PM
It's investors. They are buying up homes as fast as they can.

Seraphim
03-27-2012, 04:41 PM
This is very likely.

I still think there is one more solid plunge that will take place, BUT, it will also come with higher rates (even if only temporarily) - meaning that the lower principal but higher rate may even out the cost.

Zippy stated it pretty well, if the math adds up (especially for primary residency purposes) - do it.

This upcoming, across the board crash - is going to then be followed with money printing on a global scale like the world has never seen.

ALL real assets are going to protect you, espcially if on credit assets (a primary residency) are on a fixed rate.


imho:

The above zerohedge article reflects a "dead cat bounce" bolstered by tax season which is the buying season in housing. Combine falling prices with the lowest interest rates in our time and there is activity in the market. People need a home to live in, the real reason for buying and owning a home. This need for a roof, low interest rates, high inventory and lower prices and sellers willing to pay the majority of costs is producing a temporary bounce.

Seraphim
03-27-2012, 04:43 PM
For the record...

I think hobby farm properties and agricultural land will be the best performing real estate assets of the next 20 years.

cubical
03-27-2012, 06:49 PM
Which makes it more of a buyers market.

Just because there is a lot of something, doesn't make it a good buy.

Brian4Liberty
03-27-2012, 08:41 PM
There are all kinds of signs that a bottom has been reached. No worries, the vast majority never see the top or the bottom until it is two years in the past.

Jordan
03-28-2012, 07:47 AM
The extent to which some people go to justify bullion holdings is beyond me. What's the saying? "Never fall in love with an investment?" Yeah, that's the one.

Check it - you cannot build a new house and make money at current market prices. You can produce tons of gold for less than the current market price.

When it comes to a margin of safety, housing has it - bullion does not. Why not take a profit here in an investment that has vastly outperformed to put it into an asset class that has vastly underperformed? I'd take the chance to sell a piece of metal for more than the cost of current production to buy an asset for less than the cost of current production, especially since that asset (real estate) produces valuable cash flows.

ctiger2
03-28-2012, 09:18 AM
I'm looking to buy a house as soon as prices hit 1995 levels or lower.

Zippyjuan
03-28-2012, 11:19 AM
Depending on where you are, you might end up waiting forever. If you are in places like Detroit you may be able to pick up a couple of homes for the price of a 1995 home.

Based on the chart I posted in one of the earlier posts, in nominal terms the national prices would have to go down almost 34% more (chart indicates about $100k in 1995 vs around $150k today).

Just my opinion (nobody can know for certain), I don't think prices will fall another third.

What is your reason for wanting to purchase a home? To have an asset and get rid of paying rent or to get something for the rent money you are paying? Or to buy and try to later sell it at a profit? If it is a place to live, I would base a purchase on affordability- is there something you like and can afford- not what you think the prices may do in the future. The longer you wait, the more rent money you give away in exchange for nothing. If it is to sell and make money then perhaps targeting a particular price may (or may not) be a good move.

LibForestPaul
03-28-2012, 04:00 PM
Just because there is a lot of something, doesn't make it a good buy.
Who wants to buy a home in Detroit, cheap, rock bottom prices...

Brian4Liberty
09-28-2012, 12:03 PM
bump

CableNewsJunkie
09-28-2012, 02:58 PM
I wonder what percentage of commercial real estate can be converted into residential real estate...

Even if residential real estate is bottoming...that bottom (in real terms) will go on for AT LEAST another decade...

sailingaway
09-28-2012, 03:11 PM
The Fed is buying mortgage backed derivatives. They said they would continue action at least until 2015 to provide certainty. I think housing may go back up, but as much because they are inflating a new bubble as because it has reached bottom, although as you say, a bottom had to come eventually. I think it is a combination, at least, however.

cbc58
09-28-2012, 03:16 PM
property values have no where to go but down imho. notice i say values not price. price may go up based on inflation but unless jobs are created.. there is very little they can do to keep the market propped up forever. just look at japan. good land and quality properties will always command more in any market. if rates tick up to where they should be -- we're toast.

commercial is a time bomb. most commercial deals were done on a nearly 100% LTV with a 5-7 year balloon... that was 6-7 years ago.

Steven Douglas
09-28-2012, 07:36 PM
As far as a housing bottom goes... no chance. Shadow inventory is higher than ever, and at some point the banks will need to unload, as their accounting fraud can't make up for a lack of actual cash when the electricity bill comes due. Interest rates, of course, have nowhere to go but up.

^^^-This-^^^ & vvv-This-vvv


The Fed is buying mortgage backed derivatives. They said they would continue action at least until 2015 to provide certainty. I think housing may go back up, but as much because they are inflating a new bubble as because it has reached bottom, although as you say, a bottom had to come eventually. I think it is a combination, at least, however.

It's ironic to me that millions of houses are withheld from the market for the sole purpose of artificially propping up the value of the loans on millions of others. Fucking central meddlers.

Housing would have bottomed out much lower than it has already, had assets backing all the toxic mortgages been dumped/liquidated in fire sales onto the market by banks in the absence of protection from a counterfeiter of first resort. The Fed is trying to give banks staying power, with an artificial scarcity distortion -- intended only to keep remaining asset values and their associated debt instruments artificially high -- while hoping for a demand wave to kick in that will re-inflate a deflated bubble (or keep it from deflating even more rapidly than it has). But even that has its limits.

Even the squatting vultures would have grown impatient, tired of subsisting on interest Manna from the Fed, so it makes sense that the Fed would want to buy up and lock those assets away, to keep them from flooding onto the market. Even so, that once-overvalued supply will eventually more-than-trickle back into the market. Land can sit empty, but empty houses need to breathe, or they crumble and lose value. That supply cannot be withheld from for long, and anything that makes its way back into supply through privileged developers is not going to sit idle. It will be sold. If that happens rapidly enough, further downward pressure on prices will result. Inflation could mask that, but absent the Fed actually opting for a massive portion of American real estate going literally into ruins, I see the actual values going further down.

Carson
09-28-2012, 07:39 PM
So in another 13 years or so we will once again be able to buy a home near where we work?

Why does this dream sound so hollow?

Tudo
09-28-2012, 07:51 PM
You can buy a 3 bedroom 2 bath 1 or 2 car garage single family house on a quarter acre of land in Port Charlotte Florida,( between sarasota and ft myers ) named one of the best places in the country to retire for less than 50 grand. It goes up from there but what more could you want? 50K? The identical house 2 1/2 hours away in Broward Cnty with an entirely different vibe would cost you more than 4+ times that.

Some places are ridiculously cheap and one of the most pathetic things I've heard when responding to a house for 50K is " who will give me a job?". Unbelievable.

Seraphim
09-28-2012, 09:02 PM
Follow me now...

Massive.Systemic.Currency.Devalution.

ABCD.

Anything.Bernanke.Can't.Destroy.

Lock that rate and let the banks and the Fed eat the inflation.

Here's the gist.

Even the Pentagon is getting Fed up with these banker boys.

Gold.Is.Money.

Huge portions of the American Elite know this and understand that the long term success of America depends on it's credit markets/currency and honest transactions with foreign countries.

The US still has some of the biggest gold piles/reserves in the world. Held by who?

A lot of it held at protected military outpost.

When foreign creditors finally give the US its credit shock - it will be quickly smoothed over. I doubt otherwise.

This is supportive of MORTGAGES. Asset values.

Your American properties - other than ravaged inner city ghettos...are of spectacular value.

It aint all doom and gloom.


Silver's revaluation will ultimately trump that of golds (but gold, per ounce, still worth more).

Gold for international trade, silver for the people. It will end up looking a lot like that.

Yeah, that's my call.

Much like 1929, 2008 and the 4-5 years after are the worst.

Things begin to pick up and build after that.

Or huge war.

Teetertoters are not always fun, folks.

WW3 aside - American debt is better then most soverign debt.

My ultimate point is if you are NOT a speculator when you purchase an American property right now, my guess is 15,20, 25 years from now a lot of you will be happy for it.

Those who do it right will enjoy that in under 10 years.

People who tend to frequent RPF, also tend to be dilligent, hard working and big picture type of folk. Big picture includes time frames of 25+ years.

Your BUBBLE POPPED ALREADY!!!

The housing bubble has not popped around the world in other countries!

Yet demand for land never ends.

Which means, over the course of a 7+ year time frame...American properties are among the highest quality and most adequately valued.

I shit you not.

I scan properties in the Canadian and the US markets.

As a general investor, I feel you markets have AMAZING deals to be had.

Location, Location, Location - is in effect. SOME mortages/neighbourhoods will go near 0. MOST mortgages and MOST American properties will hold quite nicely.

BUT. I speak of accurate generalization. :-)

Farm land in both our countries are among the super nova's of economic value over the course of the next 20 years.

Brian4Liberty
09-28-2012, 09:03 PM
It's ironic to me that millions of houses are withheld from the market for the sole purpose of artificially propping up the value of the loans on millions of others. Fucking central meddlers.

Housing would have bottomed out much lower than it has already, had assets backing all the toxic mortgages been dumped/liquidated in fire sales onto the market by banks in the absence of protection from a counterfeiter of first resort. The Fed is trying to give banks staying power, with an artificial scarcity distortion -- intended only to keep remaining asset values and their associated debt instruments artificially high -- while hoping for a demand wave to kick in that will re-inflate a deflated bubble (or keep it from deflating even more rapidly than it has). But even that has its limits.

Even the squatting vultures would have grown impatient, tired of subsisting on interest Manna from the Fed, so it makes sense that the Fed would want to buy up and lock those assets away, to keep them from flooding onto the market. Even so, that once-overvalued supply will eventually more-than-trickle back into the market. Land can sit empty, but empty houses need to breathe, or they crumble and lose value. That supply cannot be withheld from for long, and anything that makes its way back into supply through privileged developers is not going to sit idle. It will be sold. If that happens rapidly enough, further downward pressure on prices will result. Inflation could mask that, but absent the Fed actually opting for a massive portion of American real estate going literally into ruins, I see the actual values going further down.

Got that right.

anaconda
09-28-2012, 09:43 PM
Wait till the commercial property defaults start to hit...:eek:

I thought this was supposed to happen in 2011?

puppetmaster
09-28-2012, 10:33 PM
I bet your wrong. .....we are not bottomed out

thoughtomator
09-29-2012, 04:55 AM
@Seraphim

I agree 100% with the ABCD philosophy but there is a grave flaw in your thinking on real estate. Real estate is not an investment. It is a durable consumer good. That misconception is a major, major reason why people can't make sense of the housing bubble. You don't buy a refrigerator or a car as an investment; a house is in the same category. Costs $ to maintain, degrades over time into worthlessness if you don't. That is not a characteristic consistent with the nature of an "investment".

cbc58
09-29-2012, 09:19 AM
Real estate is not an investment.

Many, many people would disagree with you on that statement. This doesn't explain why people can't make sense of the housing bubble - the reason they can't make sense is because the FED and banks are lying through their teeth, manipulating interest rates and foregoing traditional accounting methods. It is one big fabricated market and they change the laws and rules as they see fit.

tttppp
09-29-2012, 09:58 AM
Many, many people would disagree with you on that statement. This doesn't explain why people can't make sense of the housing bubble - the reason they can't make sense is because the FED and banks are lying through their teeth, manipulating interest rates and foregoing traditional accounting methods. It is one big fabricated market and they change the laws and rules as they see fit.

People don't understand the housing bubble because they are either uneducated or just stupid. I remember in my investment class in 2003 it was common knowledge the housing market would eventually go down. This was a few years before prices got really absurd. Additionally, in 2006 when I was in Phoenix, all the real estate companies converted their apartments to condos to capture in the high prices in expectation the market would collapse. Point is that most educated people knew what was really happing in real estate even before the collapse or bubble. As usual its the average person who gets confused about every bubble and every bottom.

oyarde
09-29-2012, 11:44 AM
We are not at the bottom , of, anything. We will see , 2016 or so , maybe.

Zippyjuan
09-29-2012, 11:59 AM
Price wise, if we are not at the bottom, we are close in my opinion. But like the overall economy (and actually BECAUSE of the overall economy) it will be a long time before you see dramatic improvements. If you are thinking about buying, this is a pretty good time.


Additionally, in 2006 when I was in Phoenix, all the real estate companies converted their apartments to condos to capture in the high prices in expectation the market would collapse.

Once the bubble burst, they started converting things back into apartments since the demand for rentals rose by so much (and so did rental rates).

Brian4Liberty
12-26-2012, 09:51 PM
Quarterly bump.

FindLiberty
12-26-2012, 10:14 PM
real estate taxes - gotcha

Zippyjuan
12-26-2012, 10:22 PM
real estate taxes - gotcha

They get added to your rent too. You don't escape them if you don't buy. If you do buy, you get something for that money you are otherwise just giving away every month. I just paid off my mortgage and got rid of that expense- effectively increasing my spendable income by about one third. Can't do that with rent.

LibForestPaul
12-27-2012, 07:53 PM
They get added to your rent too. You don't escape them if you don't buy. If you do buy, you get something for that money you are otherwise just giving away every month. I just paid off my mortgage and got rid of that expense- effectively increasing my spendable income by about one third. Can't do that with rent.

It is property that can be stolen at any time. Property taxes AND capital gains AND estate taxes. You get nothing for that money unless the people who own the money WANT you to get something.

Brian4Liberty
12-30-2012, 03:21 PM
Bubble time again. There is an interesting TV show about property bidding wars in Arizona. No inspections, no knowledge of the interior, as is. Many episodes end with a statement that they make money no matter how bad a deal they got, due to housing prices rising so fast.

http://dsc.discovery.com/tv-shows/property-wars

Seraphim
12-30-2012, 04:51 PM
ABCD.

Anything Bernanke Cannot Destroy.

Currency and credit markets are about to go into their "shit show" stage.

If you are a viable producer and smart with money, there are great residential opportunities in the USA right now. Detroit/NYC/Atlanta and other inner cities don't count, everyone knows the inner cities are decaying zoo's.

The periphery of cities and into smaller towns, rural areas (USA) are prime real estate in the whole world.

Do not forget, the whole Western world is in a housing bubble. Some places have popped, like the USA. That puts Americans at the forefront of recovery, in that sense, you are ahead of the pack.

Here in Canada, our housing bubble POP has just begun. The real damage will not be known for about 2 years.


Bubble time again. There is an interesting TV show about property bidding wars in Arizona. No inspections, no knowledge of the interior, as is. Many episodes end with a statement that they make money no matter how bad a deal they got, due to housing prices rising so fast.

http://dsc.discovery.com/tv-shows/property-wars