Quite interesting to have the terminology of statistics parsed again. But none of that takes into account the cascading aspects of where this economy is going and housing only being an element of that. This vicious cycle that we are on encompasses trillions of dollars worth of resetting mortgages going forward without any break, even accelerating into mid 2012. During that time there will no doubt be many periods of boom and bust, all on a downward trend. As people become increasingly averse to spending, as government prints money hand over fist, giving us rampant inflation, housing values won’t support the amounts needed to refinance or sell. Banks will be stuck with an increasing inventory (much of which is not being put on the market NOW in an effort to not undermine the prices of what is there now) of property which cuts directly into their bottom lines. Thus, a further cascading of bank failures. As credit is squeezed further, spending will continue to winnow to the necessities and away from the massive variety of luxuries that we have become accustomed to. This will compound job losses as well as imports which by extention will decrease exports because the markets for our domestically produced goods are driven by our appetite for the foreign produced products. VICIOUS VICIOUS cycle.

‘drollere’ amuses me as someone with a great deal of technical understanding of a topic who has no practical grasp of DYNAMIC economics.

For anyone interested in purchasing a property, the most interim point of reference should be the year 2012. Of course, that is a presidential election year and the ability of the powers that be to manipulate the economy up to that point is a very strong consideration. That pushes my timeline WELL into 2013 at which point the weight of any manipulation will be so heavy that a lame-duck second term administration will have much less incentive to move the shells around to keep a positive spin on the economy OR the NEW administration is motivated to call a spade a spade and begin to allow the chips to fall where they may and have values find their natural levels.

Unless I was completely comfortable with a property that I purchased being worth half what I paid for it and the prospect of not being able to either refinance it OR sell it anytime within the forseeable future, I would find a way to rent, even in the Dallas market where I live where we are experiencing the LEAST of the implications (so far).

We are no way near a bottom and housing will get another kick in the pants in two years when interest rates have to start going up again (to combat inflation from all this money being printed and flushed down the economy). Everything will get a shorter term kick when we finally have a large bank failure (3-6 months) (my guess is it will be Bank of America)

See the Titanic analogy here:

http://invisiblerenters.com/2009/03/29/rearranging-deck-chairs-on-the-peninsula/

There is also a nice chart that shows how, much to everyone’s surprise, the housing market CAN behave EXACTLY like the stock market.

I calculated these averages based on data from the Real Estate Disposition Corporation, which ran the auctions:

Auction month Average winning bid
Dec. 2007 $209,000
April 2008 $180,000
July, 2008 $162,000
Sept. 2008 $145,000
Dec. 2008 $114,000
Feb. 2009 $105,000
April 2009 $94,000

For the last year, the average sale price has been falling by roughly 4 percent a month. The rate of decline hasn’t tailed off.

This is just one small batch of data, obviously, but it’s consistent with the larger picture. Given the huge supply of unsold homes and the fact that houses remain expensive (relative to incomes or rents) in some big metropolitan areas, prices in some places still have a ways to fall.

The basic premise of the article is still on target, though. A lot of buyers can’t even come up with 3.5% down. They became accustomed to being able to buy a house with 0% down with the seller paying all closing costs. They could formerly walk into a property without one red cent out of pocket – ridiculous!

Washington is the people. What is so wrong with all power to the people? Nobody in Washington keep their power if more than 50% of the people decide that they shall not continue to have it. Wall street on the other hand was never elected and has always served and only answered to the rich. They were allowed to do that with the understanding that somehow that would actually also serve the people. After that illusion have been so completely destroyed it is only natural and about time that we stick it up wall streets a$$ and drown their power. All power to the people.

to be contrarian, i think the velocity of the national housing decline will abate significantly by this summer. the interactive chart posted at NY Times shows many markets have returned to recent historical levels on the chase shiller index. there very likely must be a reset downward from those levels, but a home is a very different type of investment from paper promises, and there is still a huge amount of cash on the sidelines.

i don’t think job loss and the economy are the main story about buyers; lender terms (credit availability) and job retention have a lot to do with it (fewer people now are relocating to new jobs). more important, the national statistics disguise the processes of recovery in local markets, which will start to stabilize in the midwest and atlantic first and in places like california last. even so, prices in my area — sonoma county, california — prices have stopped declining and the rate of sales has increased.

The way I saw it was that I could pick up a house for 65$ per square foot and the land came for free. For a value investor like me, it was a no brainer if you ask me.

When we were window shopping and looking at listings in a shopping center, this 50 year old guy came up to us and told us to avoid real estate. The worst investment you could ever make. He told us to rent and travel.

When I hear those words again, I’ll know we’ve bottomed. It took at least 4 years and the bubble was not even a bubble by today’s standards.

Too many people still dipping their toes for a true bottom.

The price/rent ratio makes much more sense but that too can be greatly skewed over the decades by changes in interest rates, tax laws, etc.

I’m no bubble denier, I started reading and commenting on calculated risk and the housingbubbleblog back in 2004 before bubbles were cool. But, I think folks looking to call the bottom by historical metrics without accounting for the fact that tastes and preferences change in how families spend money and those are heavily influenced by interest rates and tax benefits may be quite mistaken. I’m willing to bet that prices bottom in the Washington DC area where I live this year and I suspect the rest of the country won’t be far behind.