John Wake

Housing Decline Slowing? Wishful Thinking (Case-Shiller)

Edward, A ground zero market like Phoenix has a strong seasonal aspect to it. January is usually the worst month reflecting slow sales during the December holidays. We'll very like see a much smaller decline in the February Case-Shiller Index for Phoenix and we may very well see little or no decline for March.

I assume markets like Phoenix and Las Vegas are boat anchors on the Case-Shiller Composite 20 Index and if those and similar markets indeed flatten out we'll have a whole new ball game. We could see a lot of popular press stories about hitting the bottom in June after those March numbers come out. (It may not be the absolute bottom but if it isn't, at least it will show we are getting close.)

Housing: Most of the Decline Is Over

Yes, Virginia, we are approaching a bottom, at least for the metro Phoenix, Arizona median home price. Prices are half of the peak price. We could do another 10-15% decline standing on our head. (That would be only 5-7% off the peak price and we have already fallen 50% from the peak.) So maybe 90% of the correction has already occurred. In fact, maybe 100% of the correction has already occurred to the metro Phoenix median home price. Let's see what the March median price turns out to be. (FYI: There is great variability within the metro Phoenix market. Not every sub-market is approaching a bottom.)

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

Whoops! I kept getting a message that said my password failed when I tried to submit the comment and then when I logged-in correctly I guess it submitted ALL the previously failed submissions! I wish I could delete the extra posts. Sorry about that.

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

If they put the former homeowner or tenant into a 6 or 12 month lease, that would lower the supply of homes and help ameliorate the over-correction we are seeing in some areas.

To put it on the market right away as a leased property will only further lower property values. Leased properties usually sell for less than properties without leases. Owner occupants don't usually buy leased properties so by putting these properties into month to month leases, they largely cut out the largest, most attractive segment of home buyers. In addition, leased properties tend to sell for less because it's usually hard for real estate agents to coordinated with the tenant to show the property (why go to the trouble? there are zillions of other homes for sale), the condition of the property is usually messy, and the uncertainly you mentioned about the risk of not being able to move in immediately after closing.

So by adding a month to month tenant they are LOWERING the value of the property in most cases. (In a tough neighborhood, however, where vacant properties are usually looted, a month to month tenant would be a good idea.)

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

If they put the former homeowner or tenant into a 6 or 12 month lease, that would lower the supply of homes and help ameliorate the over-correction we are seeing in some areas.

To put it on the market right away as a leased property will only further lower property values. Leased properties usually sell for less than properties without leases. Owner occupants don't usually buy leased properties so by putting these properties into month to month leases, they largely cut out the largest, most attractive segment of home buyers. In addition, leased properties tend to sell for less because it's usually hard for real estate agents to coordinated with the tenant to show the property (why go to the trouble? there are zillions of other homes for sale), the condition of the property is usually messy, and the uncertainly you mentioned about the risk of not being able to move in immediately after closing.

So by adding a month to month tenant they are LOWERING the value of the property in most cases. (In a tough neighborhood, however, where vacant properties are usually looted, a month to month tenant would be a good idea.)

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

If they put the former homeowner or tenant into a 6 or 12 month lease, that would lower the supply of homes and help ameliorate the over-correction we are seeing in some areas.

To put it on the market right away as a leased property will only further lower property values. Leased properties usually sell for less than properties without leases. Owner occupants don't usually buy leased properties so by putting these properties into month to month leases, they largely cut out the largest, most attractive segment of home buyers. In addition, leased properties tend to sell for less because it's usually hard for real estate agents to coordinated with the tenant to show the property (why go to the trouble? there are zillions of other homes for sale), the condition of the property is usually messy, and the uncertainly you mentioned about the risk of not being able to move in immediately after closing.

So by adding a month to month tenant they are LOWERING the value of the property in most cases. (In a tough neighborhood, however, where vacant properties are usually looted, a month to month tenant would be a good idea.)

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

If they put the former homeowner or tenant into a 6 or 12 month lease, that would lower the supply of homes and help ameliorate the over-correction we are seeing in some areas.

To put it on the market right away as a leased property will only further lower property values. Leased properties usually sell for less than properties without leases. Owner occupants don't usually buy leased properties so by putting these properties into month to month leases, they largely cut out the largest, most attractive segment of home buyers. In addition, leased properties tend to sell for less because it's usually hard for real estate agents to coordinated with the tenant to show the property (why go to the trouble? there are zillions of other homes for sale), the condition of the property is usually messy, and the uncertainly you mentioned about the risk of not being able to move in immediately after closing.

So by adding a month to month tenant they are LOWERING the value of the property in most cases. (In a tough neighborhood, however, where vacant properties are usually looted, a month to month tenant would be a good idea.)

John Hussman: Applying Ockham's Razor to the Current Crisis

"In short, the essential problem is... risk-aversion and anticipatory saving triggered by fear of financial instability."

The essential problem is that many banks are, in reality, insolvent.

Housing: Where Is the Bottom?

The size of the option ARM resets is likely over-estimated in the graph. When a home buyer only makes the minimum option ARM payment, the reset is triggered early (a year or two after origination?) so the first scheduled reset may be misleading. We may be working through the worst option ARM borrowers' defaults now.

Solving the Housing Crisis in Bankruptcy Court

Very good piece except the "One more little problem" paragraph. Cram-downs will have zero affect on an appraiser's or Realtor's ability to value homes. They only look at recent home sales when judging market value, (3 to 6 months is common) and cram-downs will only affect far older sales.

Over-Correction in the Phoenix Housing Market

What's magic about 1997-98? It sounds even more ad hoc than 2003. From the graph it's clear the bubble really started to take off in Phoenix in 2004. So 2003 or 2002 are clearly pre-bubble prices.

I'm not saying prices won't go back to 1997 levels. At the current rate of decline, home prices could be there in six months or so. But then again, if we extrapolate the current rate of price decline, homes will be free in 2 years... so extrapolation is not such a great economic forecasting technique.

Over-Correction in the Phoenix Housing Market

D. McHattie makes an interesting point. One of the major causes of the housing bubble was the Community Reinvestment Act which required banks to make sub-prime loans in order to increase homeownership. Now, however, any measures to support the banks or home prices would make homes less affordable than otherwise. The advantage of a possible over-correction is more affordable housing. The bust could do more for affordable housing than the Community Reinvestment Act.

Will Lower Mortgage Rates Help Housing Recover?

4.5% would soften the landing. It might prevent some areas from over-correcting which is good, however, it would delay the final correction and prolong the pain in other areas because 4.5% isn't sustainable.

Two Mortgage Markets Emerging from the Crisis

As soon as home prices stop falling, mortgage money will magically appear.

A possible problem with government efforts to support the real estate market is that their efforts may only delay the bottom and prolong the pain.

Housing Price Corrections in the Bay Area

That fits my working theory as well.

seekingalpha.com/artic...