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Housing: Wasn't it a spectacular bubble? Almost in relief, observers like Wells Fargo's John...

Housing: Wasn't it a spectacular bubble? Almost in relief, observers like Wells Fargo's John Stumpf figure we've bottomed out and better prices are ahead. Jeremy "Bearemy" Glaser has six reasons why that's not the case. Spoiler alert: Jobs are at the top.
Comments (20)
  • Tracking various zip codes the number of foreclosed homes for sale
    has diminished except in Florida....in the dreaded 89031 zip code...
    there are 2,714 foreclosed homes for sale....there were 3,219 on
    February 14th....
    4 Jun 2011, 08:50 AM Reply Like
  • That's because there has still been no progress in resolving the problems around MERS etc. There are still millions not paying their mortgages and the banks don't know what to do. Also, by delaying the sale of foreclosures, the property is held on the books at par.

     

    The point is, the low numbers have nothing to do with the market reaching a bottom...
    4 Jun 2011, 11:11 AM Reply Like
  • There are $10. 5 triilion single family mortgages....$2.2 trillion are owned
    by the commercial banks...
    4 Jun 2011, 11:36 AM Reply Like
  • By the president leaving this up in the air and handing it over to the state AGs, it is like chumming the water for the sharks. In the end, nothing will be left either with the banks themselves or the economy. Like lowering a lamb into a grotto filled with piranhas and fishing out its skeleton.

     

    We needed leadership here. An executive order. Clarity. Something.

     

    Instead we are witnessing children with bats bashing a piƱata, and then when it breaks, all rushing in to scrabble after the candy.

     

    And that 'candy' is all the money leftover from us the taxpayer who bailed out the banks.

     

    Now its formally being re-routed to the litigation industry, all because of a few t's that weren't slashed and a couple i's that weren't dotted.

     

    We officially live in the new age of a king-of-the-mountain politics coming to a playground near you.
    4 Jun 2011, 01:37 PM Reply Like
  • Last I read the government was guranteeing over 90% of the mortgages. Which I take it to mean they really own them. That is a ratio roughly close to your numbers. Which also means we the taxpayer own those mortgages. If the banks kept the good mortgages then we the taxpayer own all the junk and the deadbeats.
    4 Jun 2011, 01:50 PM Reply Like
  • Wells Fargo's John Stumpf figures:

     

    "Home prices have bottomed in some regions, better prices are ahead, and in many cases homes are cheaper to buy than rent. Overdue payments have been declining as well, though it comes back to jobs: Jobs are the main ingredient in determining whether homeowners keep up with their loans. Americans pay their bills if they have jobs."

     

    "This man's position holds no value to society."

     

    That's what I figure
    4 Jun 2011, 09:05 AM Reply Like
  • The real estate the Big 4 really cares about is in California....track those prices if you are following the banks...
    4 Jun 2011, 09:10 AM Reply Like
  • J.B. is right!

     

    Read my lips - Unemployment will continue to rise.

     

    The government is quietly canceling contracts and pushing out bids in some areas far out into the future. That has the effect of a negative stimulus. Watch the June unemployment numbers. They will come out with a loud thud. Foreclosures will go up. Oil and real estate prices will automatically come down.
    4 Jun 2011, 09:36 AM Reply Like
  • I would go with Glaser and figure on another 5-8% drop in the next 6 months. There are rumors that NYC might be the next bubble to pop, because foreclosures have been stalled there for so long.
    4 Jun 2011, 09:39 AM Reply Like
  • NYC boroughs will not pop, between pop growth and the particular dynamics of that market.

     

    NYC suburbs are not experiencing the same impact in unemployment that other areas are, with underemployment and off-books employment contributing to a somewhat better situation than elsewhere, and I think that has helped mute the impact of the economy/housing. Most things 'decent' rarely make it past short sale status, and even shorts are hard to do in NYC suburbs if you are not experienced/handy due to high cost of labor.

     

    That said, in the boroughs, which are notorious for gov't subsidized housing, I'm seeing... even more folks renting with vouchers... and in the suburbs I'm seeing downwards pressure on rents. It's not that there aren't creditworthy tenants, it's that the creditworthy tenants are so strapped they aren't able to pay any more in rent.

     

    Also, friends and associates who are buying the low end (foreclosures, shorts, REOs) have direct connections with banks and do rehab-rental stuff.

     

    It's a real long shot to to call the NYC market next bubble to pop as market forces are well in play.

     

    But I don't believe we've hit bottom, and my #1 concern is whether we've contracted Japanese Deflationary Disease and are looking at a long term downward trend in prices (aging population, bubble pop, reduced demand, etc). With population increasing in the boroughs I suspect this market will deal with it better than others, so I was willing to buy into weakness even expecting more weakness, but picture is far from clear.
    4 Jun 2011, 10:29 AM Reply Like
  • There is only one compelling reason to buy a home and that is because you need a place to live and it is cheaper to buy than to rent. Most Americans do not think of housing this way. If you think of a home as an investment then you have no reason to hurry your purchase because housing appreciation is likely to be well into the future.
    4 Jun 2011, 10:16 AM Reply Like
  • That last item "and it is cheaper to buy than to rent" is a very big assumption. Indeed, it was this one line that kept coming up during the housing boom. But when you face a price/rent ratio of around 25 to 30, as is the case in some metro areas, it's an item whose assumptions must be tested.

     

    The buy vs rent decision is one with many different variables, including some that are very specific to the individual (such as downpayment size, interest rate, P/R ratio). To make a blanket statement that it's "cheaper to buy" is reckless.
    4 Jun 2011, 11:30 AM Reply Like
  • I did not say that it is factually cheaper to buy than to rent. I said that the reason to buy is " because you need a place to live and it is cheaper to buy than rent." That analysis is a personal one and differs by location and individual.
    4 Jun 2011, 12:05 PM Reply Like
  • My amateur calculation is home prices will be 10% higher 5 years from now...
    4 Jun 2011, 10:40 AM Reply Like
  • My response would be, do you base that on inflation/dollar devaluation, an improving house market (easing loans standards, improving economy, reduced backlogs), or something else?

     

    Although I don't think it's a bad guess, since my belief is the Fed will devalue dollar faster to avoid deflation, crush the global economy, and save the US at other people's expense.
    4 Jun 2011, 10:53 AM Reply Like
  • Basically it has to do with the ratio of the S&P Case Shiller 20 to the average
    wages per nonfarm payroll employee...
    4 Jun 2011, 11:08 AM Reply Like
  • That's a very good metric if you can extrapolate forward, in my opinion. That's approximately how I am thinking too, though I am not as technical.
    4 Jun 2011, 12:00 PM Reply Like
  • If our standard of living continues to decline, home prices can only go down. You can't buy a $500,000 house if you make minimum wage at McDonald's.
    4 Jun 2011, 11:27 AM Reply Like
  • Not going to see a renter have to put 30% down on what would be 30 years of rent payments, and also not responsible for upkeep, repair, landscaping, etc., for townhouses, duplexes, apts. Will have some responsiblility in renting a house, like mowing the lawn. Without job security, renters also have the law on their side when they can't make the rent, some states it takes 6 months to get rid of the non-paying.
    4 Jun 2011, 11:40 AM Reply Like
  • Anyone who would fork out the bucks for rental property now (with the jobs picture headed for the crapper) automatically becomes eligible for higher insurance and property taxes (as opposed to Joe Homesteader). And, he also gets a coupon for a free idiot badge. i.e. renters with no skin in the game tend to be real hard on properties.

     

    Are there some slum lords out there that always seem to turn a nice profit? Sure!
    4 Jun 2011, 12:48 PM Reply Like
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