TakBak04,
Of course this is the core of it. However, there are 2 sides: if nobody can afford homes then nobody can sell homes… that’s why the price must always adjust to the market, come what may. There is no alternative. That’s why it is pretty safe to predict that house prices will drop for a long time into the future. There will be statistical noise, but you cannot sell to people who do not have money or credit.

OOC, how is this: ” My area of NC is close to the beaches and the Mountains” even possible?
http://www.worldatlas.com/webimage/countrys/namerica/usstates/nc.htm

And the next generation, the boomer’s children, cannot afford to buy homes at all. One of my kids, 32 is unemployed living off savings and small jobs until she finds a job, the other is under employed and cannot afford to live without a room mate at age 29. About 1/3 of their friends/peers have married and less than that have bought a home. They can’t afford to! And all of these boomer’s children that I am speaking about have college degrees!

I bought my first home for $14,500 when I was 21. This is certainly a case where the younger generation is living at a lower standard of living than their parents.

What’s interesting about what he said is that they are now caught paying two mortgages. Says to me that these people probably did a HELOC on their original home to buy the second one and now they are underwater on both homes. The quality of clients he has would seem to say that if these people were that close to retirement they probably either had first mortgage paid off or were close to paying it off, but the easy money was a huge temptation to HELOC and buy the second home figuring it they could transition easily. If they were building a new house it allowed them the time to transition and if they were buying and existing home they could do renovations at their leisure. Now they are caught in a really bad circumstance and how long can they hold out paying on two homes?

Then there are other anecdotes I’ve heard in my area of folks using their property appreciation in the 2005-07 years to HELOC and buy vacation properties. My area of NC is close to the beaches and the Mountains and both areas were in building boom. This isn’t like FLA here and so it never got wild, but there are probably places all over the East Coast and up int NJ who weren’t speculators or flippers but seeing the equity in their primary residence going through the roof decided a nice place at the beach or in the Mountains would be great…and that they could always get vacation income to offset the cost.

BIL of ours who is close to retirement has been looking for a place to buy on Hilton Head Island, SC but the prices took their biggest run in 2006-07 (later than the FLA Bubble) and he couldn’t afford it. After holding tight the prices in the gated resorts down there for condo’s and homes have finally started to take a hit. Down about 20% now from 08 and new listings just coming on he says look like they are down another 10% since the season has ended.

How many people who were close to retirement got caught up in this? And, these are careful people who thought they had planned prudently? Lots of IBM and Pharma Executives in our area. These are folks who weren’t making the kind of money the hot shots do today…but made enough and saved enough to live comfortably. But, the opportunity of seeing one’s home jump $200, 000 or more in value and low interest rates for second mortgages, HELOC’s was just too tempting. Then there is the next wave of prudent older boomers who are just behind….caught in the same situation.

Where are the young people who will have a job and be able to even think about buying these homes as a first time purchase or those who would even have the ability to trade up? The Southeast outside Florida is going to have some very deep economic pain in the coming years because so much of the employment was dependent on building the new gated and ungated retirement communities for the “vacation home” market and for what the Chamber of Commerce and Building/Realestate interest told them would be a “wave of retiree’s flooding from all over the country to retire in the Carolinas and Georgia. Folks were told Florida was unsafe because of all the hurricances (remember how many Florida had in the early 2000′s) and that the Carolinas were safer and so much closer for visiting the grandkids in the Northeast and Midwest. “If you build it, they will come” was a mantra. But, if you can’t sell where your primary residence and your net worth is in the crapper then how is this going to work out?

Anyway….just some anecdotes about the “next shoes to drop.”

1. On Friday, September 16, at 19:15 AM the September data of industrial production were released showing a m-o-m increase of 0.7%[1]

2. At 9:24 AM, Harry Wanger sends out a posting saying: “Mini economic boom: Industrial Production best in 4 years! “[2]

In my world of semantics, this statements claims industrial production has had the best value in absolute terms for the last four years.

3. Harry Wanger is challenged by me regarding this statement. He calls me stupid in response to my challenge and says he heard it on TV.[3]

4. I show with official data that neither the absolute industrial production in September was highest in four years, nor the m-o-m increase was largest in four years.[4]

5. Harry Wanger doesn’t reply anymore. Instead, he is calling me stupid again in this thread here today.[5]

6. I post the link to the comment in yesterday’s thread where I presented the official data.[6]

7. Now, Harry Wanger claims he was talking about the annual rate of the quarterly change and he is calling me stupid again.

Who is going to believe any word this guy is saying here? Is calling me stupid over and over again going to help him?

[1] http://tinyurl.com/yfvqewy
[2] http://www.ritholtz.com/blog/2009/10/b-of-a-loses-1b-on-consumers-defaults/#comment-226497
[3] http://www.ritholtz.com/blog/2009/10/monday-reading-3/#comment-227458
[4] http://www.ritholtz.com/blog/2009/10/monday-reading-3/#comment-227475
[5] http://www.ritholtz.com/blog/2009/10/seasonality-bites-housing/#comment-227610
[6] http://www.ritholtz.com/blog/2009/10/seasonality-bites-housing/#comment-227635

rc

This is a lie. Even if your friend is a RE agent he cannot be selling homes to flippers using the 8,000 tax credit.

You are a liar, you were caught in your lie and you don’t like it. Be a man and admit that you made that story up.

Harry: Sharpen your stick and keep posting your scary stupid stuff – poke, poke, poke, if this was real life someone would have already kicked you out of the house.

Most people do not like being poked with a stick espcially when the are getting poked by a scary stupid like you.

There was a poster on here Harry Wagner, who is currently having his posts monitored, it appears the only reason for this monitoring is because he quoted you saying “Who the fuck cares” at least that is what was in the email he recieved from “The Big Picture”

Tell you what Harry, this Wagner guy has a family, the only reason his family has been kept at bay is out of respect for many of the truely great people who post here. Mr. Ritholts I emplore you to take HarryWangers stick away like you did Harry Wagners, if Wanger keeps poking people with his stick things will get sacry ugly