DanH

Is Wells Fargo's Latest Memo a Sign Real Estate is Bottoming?

I agree with MEXX and jigs; housing is a commodity that in stable appreciation is priced 3x average area income or 160x monthly rental income. Any other thinking is speculative or magical. Palo Alto prices are currently 13x average area income, most markets are around 6x average area income. Correction is inevitable. Also, affordable housing a a good thing, right?

As of last week we saw a 9.1% average annual decline in prices nationally, and most markets are only one year into a possible three or four year down-leg. Zandi and Schiller predict an overall 20% decline, but it seems we've reached the halfway point awfully quick.

When financing is conservative, 20% on a fixed loan is the standard. I see Wells Fargo positioning themselves to work with customers who are able put skin in the game and not walk away from a loan, nothing more nothing less.