DanH

8 Comments

    • ON: Sat Aug 2nd 05:18 AM
      Commented on:
      Some Real Talk on Housing
      A $40,000 McMansion is entirely plausible, especially if the neighborhood is one third vacant with foreclosures (and vandalized), it lies in an outlying tract area that has become a haven for lower income families squeezing 12 people into a home, and credit costs over 10%.

      What's to prevent it? Cash will be king if credit dries up and incomes fall with job losses; at that point a house will be worth what an investor paying cash is willing to pay.

      We are at the end of a 25 year era of low interest rates, and risk premiums in the secondary mortgage market are demanding higher rates currently. There's nothing the central bank can do about it; if investors won't buy the bonds the rate has to go up, and home buyers pay the cost in mortgage interest.

      Nicklethrower's right. There is nothing precious about our time in history.
      View article »
    • ON: Sun Jun 29th 02:17 AM
      Commented on:
      The Current Market Atmosphere: Easy Money Hard to Come by
      Sarah P stop yelling. Go away.
      View article »
    • ON: Sat May 31st 03:17 AM
      Commented on:
      Realtors, Prepare to Lose Your 6 Percent
      Lots of braying here. The kind you hear in the stockyard at slaughter.
      View article »
    • ON: Tue Apr 29th 22:55 PM
      Commented on:
      The Usual News: Home Price Data Remains Grim
      Always question motivation. When an appraiser seeks to discredit data, why might it be? Maybe fees are based on prices, and fees dry up when brokers have no buyers? The gravy that seeped from mortgage brokers to banks to CDOs and the subprime fiasco flowed from bloated home appraisals. Appraisals that valued unimproved fifty year-old ramblers at six times construction costs and ten times average area incomes. Big fat lies. Dishonesty. The post above is an attempt at spin, at managing public opinion. Try convincing us on the fundamentals, say matching rents or average area incomes to home values. Charlatan.
      View article »
    • ON: Thu Mar 27th 01:38 AM
      Commented on:
      The Fed Is Leaning Hard Into a Headwind
      Sorry, I see no evidence for Purl Gurl's assertion that home prices are "just right." By what measure? As a commodity the price of a home is relative to income (rents). Purchasing power is affected by income. Homes are a value when they approach a price which is 160 times average area rents. Why rents? Because you cannot leverage funds to pay rent, so market prices reflect real incomes. Another way to look at pricing would be to compare potential annual rent for the home you intend to buy, then subtract mortagage/taxes/repair... if you are in the red, you are paying a speculative price.

      Prices from 2000-2006 jumped on speculation coupled with easy credit, and outstripped incomes. A correction is inevitable, since easy credit and speculative pricing have vanished. Affordable housing is a good thing, right?
      View article »
    • ON: Sun Mar 16th 17:50 PM
      Commented on:
      Where's the Bottom?
      Reading User 163394 and bearybeary back to back is striking; the first post shows the magical thinking pervasive in bubble psychology, and the second concisely explains the downslope of a bubble. Kind of like going up, then down.

      I agree that regression to the mean is inevitable. Home values doubled in six years (and tripled in some markets), absent real growth in income. Credit has been yanked, and buyers are absent. Prices will regress to an inflation-adjusted mean, presently in the range of Nov 2002 prices. The time to that regression is our wild ride.
      View article »
    • ON: Sun Mar 9th 00:44 AM
      Commented on:
      Foreclosure-Proof Homeowners
      Why all the outrage and surprise? Renters will do the same thing in markets where eviction is legally difficult.

      How about a post on the evolving REO market, Barry?
      View article »
    • ON: Tue Mar 4th 03:02 AM
      Commented on:
      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.
      View article »
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»