WC Varones

Don't lend your hand to raise no flag atop no ship of fools

UC researchers: Calif. housing bubble will take years to unwind

Well, duh. That's what I've been saying for more than a year.
It may take the California housing market three years to recover from its downturn because homes have simply gotten too expensive for most buyers, whose salaries haven't risen nearly as fast as housing prices, an economist said.

The median price of an existing home in California will fall 4.8 percent next year and 2.9 percent the year after, Ken Rosen, chairman of the Fisher Center for Real and Urban Economics at UC Berkeley, said Monday during a presentation at the center's annual real estate and economics symposium.

That would translate into a drop of nearly $30,000 in the price of a Bay Area home in 2007, based on numbers released last week by the DataQuick real estate information service, which found that that the median price of a home in the region was $614,000 in October.

"This is not a one-year event and this is not a six-month event," Rosen said. "It's going to take three or four years for incomes to catch up to housing prices."
I'd be surprised if Bay Area median prices didn't drop a lot more than the 4.8% and 2.9% predicted for California the next two years.

We are in the greatest financial bubble in the history of the world, deliberately created by Alan Greenspan to bail out the tech stock bubble. The tech stock bubble didn't end with a single-digit pullback, and neither will this one. Housing bubbles just burst slower than stock market bubbles. Be patient.

11 comments:

Anonymous said...

still leaking in most of the country As mortgage limits gradually reset downward, high rollers in high priced areas of the country are going to increasingly be on the hook with their own money at risk when buying a fabulous shack. The Fed reacts to the wrong things like the tech bubble burst or the Y2K boogey man scare too often. They ignore the obvious problems but then over react (?) to non-sensical bullshit that would quickly resolve itself if they took a "this too shall pass" approach. If mortgage loan limits, standards and rules are revised, many high priced areas are just beginning to feel the deflation. Median S.D. asking price $379k. IF (and this is a big if) the buyer puts down 20% ($76,000 ain't exactly chump change where I come from) and does a $303k mortgage on 30 years, they are looking at p/i $1,490 monthly. Then throw on what (?) an even $1,000 for tax and insurance and now we're talking $2,500 a month. That is run of the mill median housing. Shit. That's a nut every month to cover. But what's this??? The 75% percentile sits stubbornly $648,000 asking price. Jesus, Joseph and Mary!!!!! More or less double the nut every month. For 30 frickin' years!!!!??? I am far too lazy to even contemplate such a feat of repayment - even with these ridiculously low interest rates... that is a boat load of Bernanke Funy Bucks... maybe if I had a good printing press of my own??? Hmmmm????

Anonymous said...

since the high point in 2008, the total amount of mortgage debt owed in the US has declined by 881,039 million Bernanke Fun Bucks. Went from 14,605,718 (million) to 13,724,679 (million). I don't think the goal is to really prop up prices or "values" (whatever that means to the reader). I think the goal is to control the rate of descent. Do they really care if the 75% percentile in SD goes down to a cool $450,000....??? Don't know for sure but my guess is that they don't give a rat's ass so long as it doesn't happen all at once. Their goal is to make sure the rate of descent matches off as well as possible to the principle reduction on the mortgages owed since the shack is the collateral. Nothing more and nothing less. If the collateral value does a swan dive all at once, individual debtors and buyers take a powder and you have a firesale. As long as people think the bottom is "right around the corner", the Feds can keep the game going. It' confidence. They want and need buyers and debtors to remain confident especially in very pricey markets. If they can't do it, many very large outfits fail and Uncle Sam is on the hook and we all know that he's broke and can't make good on those past promises. Unless Uncle Sam can control the rate of descent, he's shit out of options and has painted himself into a corner. He (Clinton, Raines, W, Cisneros, Governator, Jeb Bush, Maxine, Barney Frank, etc.) loved the ride on the way up because it made for some wonderful tax revenues going up... coming down's a bummer. They'll drag this shit out for as long as they can and pray they can match off to the principle reductions. Were it me calling the shots, I'd say fuck 'em.... let it crash... let it burn... screw all the bond holders... default.... let the ratings agencies take Uncle Sam's debt rating down to junk... kill 'em all and let God sort 'em out. At the end of the day, what are they really going to do about it anyway? We owe you money???? Based upon some old worn out promise??? Yeah, well fuck you and the horse you rode in on.

Anonymous said...

I really don't think they are interested in trying to re-inflate the bubble...I think they know it can't really be done. hard to take away the punch bowl when there is a party going on

Anonymous said...

The six-figure retirees make up about 2.5 percent of the county’s pensioners. San Diego County Employees Retirement Association spokeswoman Michelle Butler said that the median annual benefit of pensioners in fiscal 2010 was $21,924.

Wow! That's a big difference! Lots of peons... and just a few lords within county government.

Anonymous said...

Sixty-seven retirees on the list make $150,000 or more per year, and five make a benefit $200,000 or more per year.

wow! that's some serious jack for sittin' on your ass (where I come from) and that money has to come from somewhere.

Anonymous said...

One thought that was going through my head in 2007, 2008 was that many of these learned individuals calling the shots within city/county government could have slowed the mania simply by constricting the number of building permits and keeping the size of their municipalities from growing like a sponge taking on water. But, that's just me. Or maybe that's too simplistic... oh, but wait, we love growth for growth's sake in this country.

Anonymous said...

But most can't qualify. Mike Anderson, a mortgage broker in Baton Rouge, La., said he's turning away roughly 40 percent of customers seeking home loans and refinancing.

"I've never had to turn down so many loans upfront," Anderson said.

Banks are insisting that applicants have higher credit scores and make 20 percent down payments if they are a first-time buyer


Standards, motherfuckers.... welcome back to the world for fucking standards....

Roughly 40 percent of U.S. households have the necessary credit scores above 700 to get a prime mortgage rate, according to an Associated Press analysis of Fair Isaac Corp., or FICO, data. But just half of potentially buyers say they can save enough for a down payment, particularly one as high as 20 percent, according to a survey by the National Foundation for Credit Counseling

Anonymous said...

well here's a goddamned idea - if borrowers are having trouble saving 20% at present price levels, perhaps prices need to decline further 'cause it ain't looking like wages are going to be increasing anytime soon....

Anonymous said...

...or anyone with less than 20% down can go with a gub' mint loan and be in Uncle Sam's pocket for 20 or 30 years 'cause there I'll bet you dollars to do-nuts that there ain't gonna be no defaultin' on Uncle Sam when it comes to the regular individuals owing him money. Can you believe that some asshat from the Census Bureau phoned me last night wanting to know if I had a damned refrigerator and working flush toilets at Smug Bastard Central? I told the fucker (who had a goddamned foreign accent) that I crapped in a five gallon bucket and threw it out the window every morning after my morning constitutional.... he says he's gonna send me a letter showing how I'm obligated to answer these questions... what horseshit.

Anonymous said...

Lack of equity is what's keeping Don Meadows from refinancing. He owes $247,000 on a house in Orlando, Fla., and is paying 7 percent on a 30-year fixed loan. His monthly payment is $1,840.

If Meadows, 40, a sales manager, could refinance at today's rates, he could save more than $400 a month.

But he has no equity in his home. He bought it two years ago for $274,000. It's now worth $170,000.

"I couldn't (refinance) even if I wanted to," Meadows said. "Now, we just have to ride it out."

No Don... there ain't gonna be no "ridin' it out". You're gonna pay through the nose till the day you drop tied to that anchor of a house - unless you just say "fuck it, I ain't paying no more." Some will and some won't. My guess is that the majority who are desperate to maintain some ideal or "credit score" so that they can borrow again in the future will just keep on paying. Isn't that strange when you think about it - don't default on a debt that is killing a person.... all so that they can be able to borrow again in the future for whatever.. a car, a flat screen teevee, a jet ski, etc. So hooked on debt/credit are many people, that's exactly what they are thinking. Strange.

Anonymous said...

truly, the road to hell is in deed paved with good intentions... or bankruptcy reform, whichever you prefer A MUST read if you like to entertain notions.

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