John Preston

Housing on the Slide

believeItOrNotWeAreEdu... right... I don't believe it....

In this post, as well as you others...you utter profanity, you shout down real attempts at dialogue, and you offer NOTHING to the conversation.....ever.... there are plenty of websites for venting... SA is for real discussion...

The problem in using "fundamentals" as described here and in other posts is that it is assumed that there are some constants in the valuation process.

When Fannie and Freddie began their guideline expansion program in the late 1990's, "fundamentals" got tossed out the window. At its extreme, F/F were allowing a 100% increase (30% ratios to say 60%) in the general leveraging of income... this process in effect distorted the metrics everyone keeps harping on.

In the purchase side, TOO many borrowers could qualify for TOO much money...and the the lid came off of value ....

On the "renting side"... TOO few tenants, and EZ mortgage money for investor purchases distorted the rent to PITI ratio ....

For metrics to perform consistently, there really needs to a consistent and level lending playing field...if you combine the expected variables... income...credit ... savings.... supply of housing ... interest rates, etc., with expanding and contracting underwriting criteria...you get a very toxic mix...

Even the current mortgage "tightening" is toxic...the mortgage and real estate market right now is as manipulated, arbitrary and dangerous as was the market in 2003-2006... this is not good.

If housing were truly disconnected from the economy, like many mistakenly think it is, then the current market would not even be a discussion thread except for those filled with too much angst.

However, as I have indicated elsewhere in posts...housing and the economy are linked arm-in-arm...ask Robert Shiller to explain it to you ....

I have had discussions with others in my area of AZ and we have discussed the idea that a more European" attitude towards home ownership may develop in the US... a mindset where home buying is delayed, for some of the reasons by carey_jim.... although I am not sure immigration is on that list.... but, yes, there is a chance that the market may look different when things stabilize...