Decius wrote:
I've spoken to a number of people over the past few years who've convinced themselves that the housing bubble is really only something that is going on in California and the increase in their home price is real permanent wealth. Such a fallacy is perfectly understandable emotionally, but its bad business. Here are some graphs of the regions of the country that are most impacted by the "sub prime" forclosure problem. Do you live in one of the darkly colored areas? If so, lots of people in your area can't afford to pay their mortgages. That means housing prices in your area are going to go down. Most of the Americans on MemeStreams that I know live in such an area.

For sure, the predatory practices of lenders over the last couple of years has definitely pushed the market into uncomfortable territory, and there will be another wave of fallout as investors get whacked on their returns, but this will probably clear up by years end, maybe Q108, and then you'll see prices start rising again. Except for areas that are still dealing with fundamental economic depression (like MI).

flynn23 wrote:

Decius wrote:
I've spoken to a number of people over the past few years who've convinced themselves that the housing bubble is really only something that is going on in California and the increase in their home price is real permanent wealth. Such a fallacy is perfectly understandable emotionally, but its bad business. Here are some graphs of the regions of the country that are most impacted by the "sub prime" forclosure problem. Do you live in one of the darkly colored areas? If so, lots of people in your area can't afford to pay their mortgages. That means housing prices in your area are going to go down. Most of the Americans on MemeStreams that I know live in such an area.

For sure, the predatory practices of lenders over the last couple of years has definitely pushed the market into uncomfortable territory, and there will be another wave of fallout as investors get whacked on their returns, but this will probably clear up by years end, maybe Q108, and then you'll see prices start rising again. Except for areas that are still dealing with fundamental economic depression (like MI).

I'd be a bit wary of making that call. While productivity has been up, median income has actually been down, so I don't think you'll see a rebound. Stabilization yes, barring something else happening, but I don't see this one doing a bounce back, Joe Six-Pack doesn't have the money to power it. (So much for supply-side economics)

Mike the Usurper wrote:

flynn23 wrote:

Decius wrote:
I've spoken to a number of people over the past few years who've convinced themselves that the housing bubble is really only something that is going on in California and the increase in their home price is real permanent wealth. Such a fallacy is perfectly understandable emotionally, but its bad business. Here are some graphs of the regions of the country that are most impacted by the "sub prime" forclosure problem. Do you live in one of the darkly colored areas? If so, lots of people in your area can't afford to pay their mortgages. That means housing prices in your area are going to go down. Most of the Americans on MemeStreams that I know live in such an area.

For sure, the predatory practices of lenders over the last couple of years has definitely pushed the market into uncomfortable territory, and there will be another wave of fallout as investors get whacked on their returns, but this will probably clear up by years end, maybe Q108, and then you'll see prices start rising again. Except for areas that are still dealing with fundamental economic depression (like MI).

I'd be a bit wary of making that call. While productivity has been up, median income has actually been down, so I don't think you'll see a rebound. Stabilization yes, barring something else happening, but I don't see this one doing a bounce back, Joe Six-Pack doesn't have the money to power it. (So much for supply-side economics)

You're missing the fact that most of the gap has been made up by increasing home equity/value rise. How else are we going to fuel our debt? It's gotta come from somewhere and this has been the engine for the last 8 years or so.

flynn23 wrote:

Mike the Usurper wrote:

flynn23 wrote:

Decius wrote:
I've spoken to a number of people over the past few years who've convinced themselves that the housing bubble is really only something that is going on in California and the increase in their home price is real permanent wealth. Such a fallacy is perfectly understandable emotionally, but its bad business. Here are some graphs of the regions of the country that are most impacted by the "sub prime" forclosure problem. Do you live in one of the darkly colored areas? If so, lots of people in your area can't afford to pay their mortgages. That means housing prices in your area are going to go down. Most of the Americans on MemeStreams that I know live in such an area.

For sure, the predatory practices of lenders over the last couple of years has definitely pushed the market into uncomfortable territory, and there will be another wave of fallout as investors get whacked on their returns, but this will probably clear up by years end, maybe Q108, and then you'll see prices start rising again. Except for areas that are still dealing with fundamental economic depression (like MI).

I'd be a bit wary of making that call. While productivity has been up, median income has actually been down, so I don't think you'll see a rebound. Stabilization yes, barring something else happening, but I don't see this one doing a bounce back, Joe Six-Pack doesn't have the money to power it. (So much for supply-side economics)

You're missing the fact that most of the gap has been made up by increasing home equity/value rise. How else are we going to fuel our debt? It's gotta come from somewhere and this has been the engine for the last 8 years or so.

No, I'm not missing that. You're assuming the debt continues to be fueled. I'm saying it's a very real possibility that the "debt engine" breaks. Welcome to 1929 all over again.

Mike the Usurper wrote:

flynn23 wrote:

Mike the Usurper wrote:

flynn23 wrote:

Decius wrote:
I've spoken to a number of people over the past few years who've convinced themselves that the housing bubble is really only something that is going on in California and the increase in their home price is real permanent wealth. Such a fallacy is perfectly understandable emotionally, but its bad business. Here are some graphs of the regions of the country that are most impacted by the "sub prime" forclosure problem. Do you live in one of the darkly colored areas? If so, lots of people in your area can't afford to pay their mortgages. That means housing prices in your area are going to go down. Most of the Americans on MemeStreams that I know live in such an area.

For sure, the predatory practices of lenders over the last couple of years has definitely pushed the market into uncomfortable territory, and there will be another wave of fallout as investors get whacked on their returns, but this will probably clear up by years end, maybe Q108, and then you'll see prices start rising again. Except for areas that are still dealing with fundamental economic depression (like MI).

I'd be a bit wary of making that call. While productivity has been up, median income has actually been down, so I don't think you'll see a rebound. Stabilization yes, barring something else happening, but I don't see this one doing a bounce back, Joe Six-Pack doesn't have the money to power it. (So much for supply-side economics)

You're missing the fact that most of the gap has been made up by increasing home equity/value rise. How else are we going to fuel our debt? It's gotta come from somewhere and this has been the engine for the last 8 years or so.

No, I'm not missing that. You're assuming the debt continues to be fueled. I'm saying it's a very real possibility that the "debt engine" breaks. Welcome to 1929 all over again.

I'm sticking my head in the sand, plugging my ears, and singing "LALALALALALA!!!"

flynn23 wrote:
For sure, the predatory practices of lenders over the last couple of years has definitely pushed the market into uncomfortable territory, and there will be another wave of fallout as investors get whacked on their returns, but this will probably clear up by years end, maybe Q108, and then you'll see prices start rising again. Except for areas that are still dealing with fundamental economic depression (like MI).

Flynn's observations seem to track those of economists.

Fannie Mae says "at some point in 2008 he expects unsold inventories to have fallen enough to relieve downward pressure on house prices."

NAR says "it expects existing-home sales to rise to nearly 6.4 million in 2008, up from the 2007 estimate of more than 6.1 million. Nearly 6.5 million existing homes were sold in 2006, the association said."

Bernanke says "the pace of home sales seems likely to remain sluggish for a time, partly as a result of some tightening in lending standards and the recent increase in mortgage interest rates. Sales should ultimately be supported by growth in income and employment as well as by mortgage rates that--despite the recent increase--remain fairly low relative to historical norms. However, even if demand stabilizes as we expect, the pace of construction will probably fall somewhat further as builders work down stocks of unsold new homes. Thus, declines in residential construction will likely continue to weigh on economic growth over coming quarters, although the magnitude of the drag on growth should diminish over time."

However, there is some risk that there are more people in houses they can't afford than the Fed estimates. Bernanke also says "One risk to the outlook is that the ongoing housing correction might prove larger than anticipated."

SHady credit card practices aren't helping America as a whole, but Congress keeps catering to the banks that do it.

My husband works in the housing industry, in North Georgia, and while he is busier than ever designing extremely large homes (5,000 square feet and up) the designers that do the average houses don't have much work at all - especially in and around Atlanta, even after a reduction in work force.

That says something...not sure what, but I suspect it confirms that only the rich are getting richer....and they are building custom homes. JMO.

Decius wrote:

flynn23 wrote:
For sure, the predatory practices of lenders over the last couple of years has definitely pushed the market into uncomfortable territory, and there will be another wave of fallout as investors get whacked on their returns, but this will probably clear up by years end, maybe Q108, and then you'll see prices start rising again. Except for areas that are still dealing with fundamental economic depression (like MI).

Flynn's observations seem to track those of economists.

You're far too generous. I make that statement because of two keys:

1) US population debt to equity ratio is obscenely tilted in the wrong direction and real estate values rising has been the only thing keeping us from a massive depression.

2) Rental rates are too high in most areas. It's far cheaper to buy a home, even with junk financing, than to rent. So even tho a lot of people have jumped into the home ownership market who can't support a home (for whatever reason), they'll be back in line soon enough because they can't afford to rent.