John Wake's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/7811/comments http://seekingalpha.com/article/176743/comments?source=feed#comment-792734 792734
I think it gets down to the amount of money chasing a fixed amount of goods. For several reasons there was money available to buy homes that wasn't available to buy cars, stocks or anything else. You could get a home loan without having any income but you couldn't finance the purchase of a washing machine without having a job. That money had to go to housing, it couldn't go toward other purchases (except indirectly). So there was a lot of money chasing homes and housing prices skyrocketed.

There were, of course, other factors but I think "money chasing goods" was the top factor.]]> Sun, 06 Dec 2009 13:31:53 -0500
I think it gets down to the amount of money chasing a fixed amount of goods. For several reasons there was money available to buy homes that wasn't available to buy cars, stocks or anything else. You could get a home loan without having any income but you couldn't finance the purchase of a washing machine without having a job. That money had to go to housing, it couldn't go toward other purchases (except indirectly). So there was a lot of money chasing homes and housing prices skyrocketed.

There were, of course, other factors but I think "money chasing goods" was the top factor.]]> http://seekingalpha.com/article/157676/comments?source=feed#comment-642089 642089
Now, let's talk about the demand side or, rather, the quantity demanded. The prices are so low and the number of sales is so high, in Phoenix for example, that markets are clearing. In a several low cost areas of Phoenix, the quantity demanded is so high that they could clear MORE supply.

To give you an idea how crazy the market is in Phoenix, let's look at homes sold within the City of Phoenix, not metro Phoenix. The median sold price was $64,000 in March. That means, of course, that half the homes sold for $64,000 or LESS. By June the median price in the City of Phoenix increased to a whopping $78,000. (Based are Arizona State University data.)

Prices are so low in a several zip codes in the City of Phoenix that the quantity demanded has exceeded supply and prices have increased. At their current price level, those zip codes could likely clear continued high levels of foreclosure supply and, indeed, prices have likely bottomed out in those zip codes already.

Prices, however, haven't fallen to that point in most metropolitan Phoenix zip codes and at current prices the quantity demanded is less than the supply. ]]> Sun, 23 Aug 2009 13:54:10 -0400
Now, let's talk about the demand side or, rather, the quantity demanded. The prices are so low and the number of sales is so high, in Phoenix for example, that markets are clearing. In a several low cost areas of Phoenix, the quantity demanded is so high that they could clear MORE supply.

To give you an idea how crazy the market is in Phoenix, let's look at homes sold within the City of Phoenix, not metro Phoenix. The median sold price was $64,000 in March. That means, of course, that half the homes sold for $64,000 or LESS. By June the median price in the City of Phoenix increased to a whopping $78,000. (Based are Arizona State University data.)

Prices are so low in a several zip codes in the City of Phoenix that the quantity demanded has exceeded supply and prices have increased. At their current price level, those zip codes could likely clear continued high levels of foreclosure supply and, indeed, prices have likely bottomed out in those zip codes already.

Prices, however, haven't fallen to that point in most metropolitan Phoenix zip codes and at current prices the quantity demanded is less than the supply. ]]> http://seekingalpha.com/article/145946/comments?source=feed#comment-569478 569478 Wed, 01 Jul 2009 03:26:30 -0400 http://seekingalpha.com/article/141232/comments?source=feed#comment-532036 532036
In a falling market you want to sell ASAP. The fact the Geithner barely moved on the list price guarantees that he will chase the market down.

He's not alone, of course. Most home sellers in a declining market are in denial. There is an amazing amount of emotion and self image tied to their home's value and they've already spent the profit in their head many times over.

A price reduction to the average home seller feels like a death in the family. So they don't reduce the price, they don't sell the home but they do ride the market down.

Rationally, he should reduce the price until he finds the highest price at which it will sell.

There is a huge amount of emotion tied to money. When it comes to money, even economic rocket scientists like Geithner make irrational decisions.

(To be fair, he may have decided that if he got his (unrealistic) price he would sell, otherwise, he would hold on to it for when he moves back to New York. Financially, however, he would have almost certainly been better selling sooner rather than later.)
]]> Thu, 04 Jun 2009 13:26:40 -0400
In a falling market you want to sell ASAP. The fact the Geithner barely moved on the list price guarantees that he will chase the market down.

He's not alone, of course. Most home sellers in a declining market are in denial. There is an amazing amount of emotion and self image tied to their home's value and they've already spent the profit in their head many times over.

A price reduction to the average home seller feels like a death in the family. So they don't reduce the price, they don't sell the home but they do ride the market down.

Rationally, he should reduce the price until he finds the highest price at which it will sell.

There is a huge amount of emotion tied to money. When it comes to money, even economic rocket scientists like Geithner make irrational decisions.

(To be fair, he may have decided that if he got his (unrealistic) price he would sell, otherwise, he would hold on to it for when he moves back to New York. Financially, however, he would have almost certainly been better selling sooner rather than later.)
]]> http://seekingalpha.com/article/141184/comments?source=feed#comment-531992 531992
It turns out that the $8,000 can NOT be used for the down payment, although a HUD official previously announced otherwise. I guess they thought better of the idea.

Nevertheless, last Friday HUD announced it would allow FHA-approved lenders to create bridge loans to buyers who qualify for the $8,000 and the bridge loans can pay for closing costs but can NOT pay for any of the 3.5% minimum down payment required on FHA loans.]]> Thu, 04 Jun 2009 12:59:44 -0400
It turns out that the $8,000 can NOT be used for the down payment, although a HUD official previously announced otherwise. I guess they thought better of the idea.

Nevertheless, last Friday HUD announced it would allow FHA-approved lenders to create bridge loans to buyers who qualify for the $8,000 and the bridge loans can pay for closing costs but can NOT pay for any of the 3.5% minimum down payment required on FHA loans.]]> http://seekingalpha.com/article/139380/comments?source=feed#comment-516951 516951
Misleading. From your comment it's apparent Phoenix had the highest amount of job loses in the country but elsewhere I've read that the Phoenix unemployment rate is still only 7.3 percent while the national average is 8.9 percent.

Next year construction employment will pick up from an extremely low 2009 and even though construction employment will still be way below "normal" everyone will say what wonderful employment gains Phoenix has made in 2010. ]]> Mon, 25 May 2009 14:09:59 -0400
Misleading. From your comment it's apparent Phoenix had the highest amount of job loses in the country but elsewhere I've read that the Phoenix unemployment rate is still only 7.3 percent while the national average is 8.9 percent.

Next year construction employment will pick up from an extremely low 2009 and even though construction employment will still be way below "normal" everyone will say what wonderful employment gains Phoenix has made in 2010. ]]> http://seekingalpha.com/article/139428/comments?source=feed#comment-516916 516916
Subprime loans were much more profitable than prime loans for many years when homes were appreciating. The size of the subprime market exploded until home prices stop appreciating and subprime loan became boat anchors. ]]> Mon, 25 May 2009 13:37:32 -0400
Subprime loans were much more profitable than prime loans for many years when homes were appreciating. The size of the subprime market exploded until home prices stop appreciating and subprime loan became boat anchors. ]]> http://seekingalpha.com/article/139030/comments?source=feed#comment-514243 514243
I think that chart over-estimates the recast problem because, as you say, the vast majority of option ARM borrowers only make the minimum payment. Those who only pay the minimum each month will trigger an early reset on the loan long before the scheduled reset. That would mean a certain percentage, perhaps large percentage, of those in yellow have already been foreclosed upon or are currently in the process of being foreclosed upon.
]]> Fri, 22 May 2009 09:45:12 -0400
I think that chart over-estimates the recast problem because, as you say, the vast majority of option ARM borrowers only make the minimum payment. Those who only pay the minimum each month will trigger an early reset on the loan long before the scheduled reset. That would mean a certain percentage, perhaps large percentage, of those in yellow have already been foreclosed upon or are currently in the process of being foreclosed upon.
]]> http://seekingalpha.com/article/138642/comments?source=feed#comment-511364 511364 ]]> Wed, 20 May 2009 11:34:58 -0400 ]]> http://seekingalpha.com/article/138404/comments?source=feed#comment-509993 509993
I think you are going to wonder why the hell you didn't buy in 2009 when interest rates were crazy low.
]]> Tue, 19 May 2009 13:49:33 -0400
I think you are going to wonder why the hell you didn't buy in 2009 when interest rates were crazy low.
]]> http://seekingalpha.com/article/137655/comments?source=feed#comment-503767 503767
1) The median home price in Phoenix has fallen 51% from the peak. If you bought around the peak, it doesn't matter if you put 0, 3.5 or 20 percent down, you have a large incentive to default.

2) Money is cheap but hard - the interest rate is great but it's hard to qualify for a loan. The people getting these loans are more qualified than many who got loans during the boom. For example, today there are no no-doc loans and people are not being qualified using the 1 year teaser rate.

Yeah, people who put 0 percent down will default at a higher rate than those who put some money down but that default rate is not going to be in the same ballpark as the default rates we've seen since the peak.

In addition, the median home price may be bottoming out in some areas of Phoenix. Since falling prices were the greatest generator of defaults, it seems to me that you are exaggerating the default rates on these loans that receive the $8,000 tax credit, in metro Phoenix anyway. ]]> Thu, 14 May 2009 12:05:10 -0400
1) The median home price in Phoenix has fallen 51% from the peak. If you bought around the peak, it doesn't matter if you put 0, 3.5 or 20 percent down, you have a large incentive to default.

2) Money is cheap but hard - the interest rate is great but it's hard to qualify for a loan. The people getting these loans are more qualified than many who got loans during the boom. For example, today there are no no-doc loans and people are not being qualified using the 1 year teaser rate.

Yeah, people who put 0 percent down will default at a higher rate than those who put some money down but that default rate is not going to be in the same ballpark as the default rates we've seen since the peak.

In addition, the median home price may be bottoming out in some areas of Phoenix. Since falling prices were the greatest generator of defaults, it seems to me that you are exaggerating the default rates on these loans that receive the $8,000 tax credit, in metro Phoenix anyway. ]]> http://seekingalpha.com/article/133998/comments?source=feed#comment-484119 484119
www.arizonarealestaten.../]]> Thu, 30 Apr 2009 11:36:20 -0400
www.arizonarealestaten.../]]> http://seekingalpha.com/article/130612/comments?source=feed#comment-461562 461562
When housing improves, sure the banks can make some money on new loans but that income will be a drop in the bucket compared to the losses hanging over their heads from those 2005-2007 loans with huge negative equity. Years from now that homeowner will retire or lose his job or get divorced or have a kid and will move out. And when that happens, the banks will end up forgiving tons of debt in a short sale or will foreclose and lose a ton of money that way.

Don't tie the housing industry to the banking industry.]]> Mon, 13 Apr 2009 11:25:18 -0400
When housing improves, sure the banks can make some money on new loans but that income will be a drop in the bucket compared to the losses hanging over their heads from those 2005-2007 loans with huge negative equity. Years from now that homeowner will retire or lose his job or get divorced or have a kid and will move out. And when that happens, the banks will end up forgiving tons of debt in a short sale or will foreclose and lose a ton of money that way.

Don't tie the housing industry to the banking industry.]]> http://seekingalpha.com/article/130508/comments?source=feed#comment-460555 460555
If an Option Adjustable Rate borrower only makes the minimum payment, and many do, the loan will automatically reset long before the scheduled reset date.]]> Sun, 12 Apr 2009 12:15:25 -0400
If an Option Adjustable Rate borrower only makes the minimum payment, and many do, the loan will automatically reset long before the scheduled reset date.]]> http://seekingalpha.com/article/130521/comments?source=feed#comment-460524 460524
Another strategy as prices approach bottom would be for banks to become landlords and just rent the properties until market conditions improve. But again it's a strategy that depends on prices leveling off to be successful.

It's all moot however because banks aren't clever enough to use either strategy. Bureaucracy is more important than profits for banks.]]> Sun, 12 Apr 2009 11:51:51 -0400
Another strategy as prices approach bottom would be for banks to become landlords and just rent the properties until market conditions improve. But again it's a strategy that depends on prices leveling off to be successful.

It's all moot however because banks aren't clever enough to use either strategy. Bureaucracy is more important than profits for banks.]]> http://seekingalpha.com/article/128835/comments?source=feed#comment-448563 448563
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.) ]]> Wed, 01 Apr 2009 19:09:16 -0400
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.) ]]> http://seekingalpha.com/article/127515/comments?source=feed#comment-438255 438255 Tue, 24 Mar 2009 12:00:58 -0400 http://seekingalpha.com/article/124441/comments?source=feed#comment-416172 416172 Fri, 06 Mar 2009 12:54:28 -0500 http://seekingalpha.com/article/124441/comments?source=feed#comment-416162 416162
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.)]]> Fri, 06 Mar 2009 12:49:41 -0500
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.)]]> http://seekingalpha.com/article/124441/comments?source=feed#comment-416158 416158
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.)]]> Fri, 06 Mar 2009 12:48:09 -0500
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.)]]> http://seekingalpha.com/article/124441/comments?source=feed#comment-416156 416156
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.)]]> Fri, 06 Mar 2009 12:47:13 -0500
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.)]]> http://seekingalpha.com/article/124441/comments?source=feed#comment-416154 416154
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.)]]> Fri, 06 Mar 2009 12:46:53 -0500
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.)]]> http://seekingalpha.com/article/116509/comments?source=feed#comment-367994 367994
The essential problem is that many banks are, in reality, insolvent.]]> Tue, 27 Jan 2009 16:16:47 -0500
The essential problem is that many banks are, in reality, insolvent.]]> http://seekingalpha.com/article/113843/comments?source=feed#comment-350782 350782 Fri, 09 Jan 2009 11:26:43 -0500 http://seekingalpha.com/article/112807/comments?source=feed#comment-343576 343576 Thu, 01 Jan 2009 14:51:43 -0500 http://seekingalpha.com/article/112390/comments?source=feed#comment-340040 340040
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.]]> Sun, 28 Dec 2008 20:34:33 -0500
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.]]> http://seekingalpha.com/article/112390/comments?source=feed#comment-339802 339802 Sun, 28 Dec 2008 12:39:06 -0500 http://seekingalpha.com/article/109710/comments?source=feed#comment-324611 324611 Tue, 09 Dec 2008 10:31:08 -0500 http://seekingalpha.com/article/109634/comments?source=feed#comment-323854 323854
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.]]> Mon, 08 Dec 2008 11:52:41 -0500
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.]]> http://seekingalpha.com/article/109521/comments?source=feed#comment-323209 323209
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