Where will Real Estate Bottom?

[william the wie]

We all bow to your "german superiority"..... You truly are the "master race" SIEG HEIL!!!!!

do you really have to acknowledge the worsest prejudices the world has to the americans? Is that all you´re able to, gun-lover?

btw: your name is german too.

As in we still take scalps and skulls as momentos? A falsehood (Domestic acquisition is now banned and HSD expropriates the big coffee cans packed with salt to cure the trophies. A sad day for sure.)

 

[Zander]

We all bow to your "german superiority"..... You truly are the "master race" SIEG HEIL!!!!!

do you really have to acknowledge the worsest prejudices the world has to the americans? Is that all you´re able to, gun-lover?

btw: your name is german too.

You poor, poor victim. How sad for you. You come here and attack everything American (review your posts you xenophobic asshole) while you wax on on about how Superior everything "German" is and then you have the nerve to say I am confirming prejudices about Americans? you're a perfect nazi troll.

 

[Zander]

believe it or not, we have sometimes earthquakes here too. And no houses were crashing down then. And til this damn clima change, we got even our first tornados. And no houses are blown away.

I haven´t a house or a gun. I´ve got a fine neighbourhood, i can trust in. I can let my door unlocked for the whole night without having fear to become robbed out. I prefer that, even my social safety, my health insurance, my free school and university education system, the fine german infrastructure, the peace and freedom in the entire europe and the low criminal rate. And if i want, i could become here a millionaire too.

We all bow to your "german superiority"..... You truly are the "master race" SIEG HEIL!!!!!

Well that was fuckin' uncalled for, ya jerk.

Not really. This jerk has posted here around 70 times - every one of his/er/it's posts have something negative to say about the USA. **** him/her/it. He/her/it is nothing but a troll. Probably not even German.....

 

[william the wie]

A somewhat low blow Zander but understandable.

 

[Mr. Sauerkraut]

You poor, poor victim. How sad for you. You come here and attack everything American (review your posts you xenophobic asshole) while you wax on on about how Superior everything "German" is and then you have the nerve to say I am confirming prejudices about Americans? you're a perfect nazi troll.

i can´t pretent discussing with you on this low level of respect and intelligence, Mr. jack salmon (that´s what the name "zander" is meaning)

 

[Mr. Sauerkraut]

Well that was fuckin' uncalled for, ya jerk.

Not really. This jerk has posted here around 70 times - every one of his/er/it's posts have something negative to say about the USA. **** him/her/it. He/her/it is nothing but a troll. Probably not even German.....[/QUOTE]

We have a word here: "Wenn America hustet, bekommen wir eine Lungenentzündung"

"If the usa makes a cough, we get an infection of the lungs."

The things in your country are going bad in every way. Pollution, education, poverty, criminality, employment and so on. Because this, it can´t be equal to us, what happpens in your country.

All that I trie to tell you is, that this hasn´t to be, if you twist a little bit your attitude. The concepts that made you big are gone. you´ve lost them somewhere. There are other ways to handle problems and every problems got it´s solution. But first of all, you have to open your eyes and accept reality.

 

[editec]

I have been looking over data for Jax Beach FL and I find the Case-Shiller data even more optimistic than ever. Looking at houses here are the trendlines

By 1990 virtually all land within the city limits had been developed.

In 1972 the house I live in was bought by wife for 10K.

In 1985 we were advised to list at 40K.

In 2000-2 some of my wife's friends bought the same model house at 100-120K for a value based on distance from the ocean of 100K for our home.

At peak based on Zillow numbers value was about 350K.

Current value for comparables about 210K.

I would expect at least another 57% drop to 90K before a bottom is reached.

What are your estimates for future decline and why?

Willey,

Of course the aggregate market values of homes will depend on:

The median average income (they're going down right now)

The interest rates charged by the banks

The underwriting rules that they banks apply to potential borrowers

The LOCAL conditions of that market.

Now for over two decades (in the 80s and 90s) I expected the market value of homes to decline precisely because their median price was so far in excess of the median average income.

What sustained the rising prices was the low interest rates AND the insane underwriting policies of the banks which IGNORED the incomes and assets of the buyers.

Personally I think that the market value of housing (generally, remember RE prices are always based on local conditions) to fall to the point where..

The median home price is about equivalent to to 1.5times the median family income.

Right now I'm informed that nationwide the median family incomes (before taxes) is about $51,000 a year (down from nearly $56,000 in 2000 or so).

ERGO, assuming that underwriting gets sane and assuming that the interest rates don't change dramatically, I'd expect the median home price in the USA to be in the $75,000 to $100,000 range.

Basically 1.5 - 2 years median family income.

In regions where the median family income is higher, or lower, expect the market value of homes to be higher or lower.

All this could, of course, change dramtically if marco-economic events dramtically cnage the way things work.

For example, HYPERINFLATION could easily make all the above meaningless.

In that case the price of homes could rise stupendously even while we were ALL getting poorer.

 

[loosecannon]

I have been looking over data for Jax Beach FL and I find the Case-Shiller data even more optimistic than ever. Looking at houses here are the trendlines

By 1990 virtually all land within the city limits had been developed.

In 1972 the house I live in was bought by wife for 10K.

In 1985 we were advised to list at 40K.

In 2000-2 some of my wife's friends bought the same model house at 100-120K for a value based on distance from the ocean of 100K for our home.

At peak based on Zillow numbers value was about 350K.

Current value for comparables about 210K.

I would expect at least another 57% drop to 90K before a bottom is reached.

What are your estimates for future decline and why?

Willey,

Of course the aggregate market values of homes will depend on:

The median average income (they're going down right now)

The interest rates charged by the banks

The underwriting rules that they banks apply to potential borrowers

The LOCAL conditions of that market.

Now for over two decades (in the 80s and 90s) I expected the market value of homes to decline precisely because their median price was so far in excess of the median average income.

What sustained the rising prices was the low interest rates AND the insane underwriting policies of the banks which IGNORED the incomes and assets of the buyers.

Personally I think that the market value of housing (generally, remember RE prices are always based on local conditions) to fall to the point where..

The median home price is about equivalent to to 1.5times the median family income.

Right now I'm informed that nationwide the median family incomes (before taxes) is about $51,000 a year (down from nearly $56,000 in 2000 or so).

ERGO, assuming that underwriting gets sane and assuming that the interest rates don't change dramatically, I'd expect the median home price in the USA to be in the $75,000 to $100,000 range.

Basically 1.5 - 2 years median family income.

In regions where the median family income is higher, or lower, expect the market value of homes to be higher or lower.

All this could, of course, change dramtically if marco-economic events dramtically cnage the way things work.

For example, HYPERINFLATION could easily make all the above meaningless.

In that case the price of homes could rise stupendously even while we were ALL getting poorer.

You make some good points but you overlook the fact that about half of the total economy in the developed world operates within the investment domain. And homes are clear targets for investment.

IOW there is support from the investment community for RE albeit a buyer's market today. Over the long term the same folks who would love to privatize the water supply and own rights to pollute would also love to own the farmland and get a monthly check from a swelling renting class.

They like cash cows! And rental property is a cash cow.

Bottom line is that if Plutonomics is the new economics then it makes little difference what the income to home price ratio is, people have to live somewhere and they will pay a premium to insure that means indoors.

What will the rental market bear? Longterm?

 

[william the wie]

Sorry LC oversupply of housing units is flatout insane. Extended stay hotels, RVs, campers and MH parks are adequate to house a huge percentage of the population and that is without conversion of failed hotels and motels. Real estate as a whole is and will be a money pit for a very long time. The economy supports a vacancy rate of at least 10% per class of housing but of the 10 or so classes of housing all classes have about double the market clearing levels of vacancies. These oversupplies are multiplicative or worse. Conversion of McMansions to rooming houses, for example, can easily quintuple usage of existing houses for example. Average price to clear the market will have to go below 1 year's average income. The shadow inventory of housing is claimed to be 9 years but that does not include conversion of bankrupt hotels and motels into SROs with low monthly and weekly rental rates. About 30 trillion of real wealth will go poof before the bottom is reached.

 

[Mr. Sauerkraut]

grrr...when i think about spain i lose my hair. they buildet after the dotcom crash houses like hell and they have now the same giant excess supply of flats, apartments or houses like you have, including the financial effects. Our politicains in Europe try their best to hide this problem but i´m really in fear...but what will that help?

 

[loosecannon]

Willie, I think 25% of America's housing inventory is unfit to live in, esp in the failing inner cities.

What is the useful lifespan of a typical US home anymore? 50 years? Everything built in the 70s was crap. Most of that era's housing was dying 10 years ago.

And population is increasing.

My point is that renters can afford to pay more than home buyers for the same living space, and they will. Folks like KissMy will buy as many auctioned homes as they can and suck up that inventory even if they have to sit on it a few years.

Inflation will eventually support prices and the cycle begins anew with a smaller % destined to ever own their own home again.

 

[william the wie]

Willie, I think 25% of America's housing inventory is unfit to live in, esp in the failing inner cities.

What is the useful lifespan of a typical US home anymore? 50 years? Everything built in the 70s was crap. Most of that era's housing was dying 10 years ago.

True. Bubble housing includes a bigger percentage of crap housing but the real crap gets replaced with something solid after the first flood, hurricane, fire season or Earthquake. Most US housing has been built in such hazard zones since the early 1800s because that's where the fertile bottomland, fishing, timber or mineral wealth is to be found. Chicago and St. Louis are doing well for farm town. Likewise the fishing country of the of the east, gulf and Alaskan coasts. The timberlands of New England, the industrial midwest and Pacific northwest still make money only slower. San Francisco and Denver are doing well for gold and Molybdenum rush towns.

And population is increasing.

My point is that renters can afford to pay more than home buyers for the same living space, and they will. Folks like KissMy will buy as many auctioned homes as they can and suck up that inventory even if they have to sit on it a few years.

Inflation will eventually support prices and the cycle begins anew with a smaller % destined to ever own their own home again.

Minus net immigration, population growth is essentially flat and has been for more than a decade. Money destruction in the banking system is still running hard and is likely to worsen due to foreclosuregate. BofA and Wells Fargo are headed for shotgun weddings to avoid insolvencies and at least a 1,000 other banks are going bye-bye in the coming years with an expected minimum of 200 outright failures and forced mergers for this year alone. I standby my prediction.

 

[Revere]

Why do you ask questions when you seem to think you have all the answers?

 

[william the wie]

Why do you ask questions when you seem to think you have all the answers?

I don't, there are always knowledge gaps but forcing responses through argument uncovers unknown unknowns better than any other interrogation technique known. I am trying to determine the following.

What classes of residential real estate am I ignorant of?

What assumptions are shaping the speed of reversion to the mean?

How will I recognize the surrender point and therefore the time to buy for investment?

Unlike Toro I invest my own money solely so I have to asses risk better.

 

[Revere]

You're a professorial, pompous ass who knows nothing about real estate and obviously doesn't work in it.

 

[william the wie]

Gee why don't you use data to prove that.

 

[loosecannon]

Willie, I think 25% of America's housing inventory is unfit to live in, esp in the failing inner cities.

What is the useful lifespan of a typical US home anymore? 50 years? Everything built in the 70s was crap. Most of that era's housing was dying 10 years ago.

True. Bubble housing includes a bigger percentage of crap housing but the real crap gets replaced with something solid after the first flood, hurricane, fire season or Earthquake. Most US housing has been built in such hazard zones since the early 1800s because that's where the fertile bottomland, fishing, timber or mineral wealth is to be found. Chicago and St. Louis are doing well for farm town. Likewise the fishing country of the of the east, gulf and Alaskan coasts. The timberlands of New England, the industrial midwest and Pacific northwest still make money only slower. San Francisco and Denver are doing well for gold and Molybdenum rush towns.

And population is increasing.

My point is that renters can afford to pay more than home buyers for the same living space, and they will. Folks like KissMy will buy as many auctioned homes as they can and suck up that inventory even if they have to sit on it a few years.

Inflation will eventually support prices and the cycle begins anew with a smaller % destined to ever own their own home again.

Minus net immigration, population growth is essentially flat and has been for more than a decade. Money destruction in the banking system is still running hard and is likely to worsen due to foreclosuregate. BofA and Wells Fargo are headed for shotgun weddings to avoid insolvencies and at least a 1,000 other banks are going bye-bye in the coming years with an expected minimum of 200 outright failures and forced mergers for this year alone. I standby my prediction.

our pop is growing at a rate of 9%/decade. Homes are being destroyed at a reasonably rapid pace. I realize there is inventory, but that won't last a decade. Homes are too perishable to sit vacant for 10 years. And there are a lot of older homes in the US that will be worthless if they sit idle for 10 years.

Nobody knows where the bottom is, but odds are good that investors will assume a larger share of US residential real estate and we will begin a long term shift toward an increased rental market and a decrease in personal home ownership.

So prices will be increasingly determined by what price landlords will pay, and renters can afford to pay a lot more for homes than owners can. No taxes, no interest, no maintenance, not as many improvements.

 

[Revere]

Willie, I think 25% of America's housing inventory is unfit to live in, esp in the failing inner cities.

What is the useful lifespan of a typical US home anymore? 50 years? Everything built in the 70s was crap. Most of that era's housing was dying 10 years ago.

True. Bubble housing includes a bigger percentage of crap housing but the real crap gets replaced with something solid after the first flood, hurricane, fire season or Earthquake. Most US housing has been built in such hazard zones since the early 1800s because that's where the fertile bottomland, fishing, timber or mineral wealth is to be found. Chicago and St. Louis are doing well for farm town. Likewise the fishing country of the of the east, gulf and Alaskan coasts. The timberlands of New England, the industrial midwest and Pacific northwest still make money only slower. San Francisco and Denver are doing well for gold and Molybdenum rush towns.

And population is increasing.

My point is that renters can afford to pay more than home buyers for the same living space, and they will. Folks like KissMy will buy as many auctioned homes as they can and suck up that inventory even if they have to sit on it a few years.

Inflation will eventually support prices and the cycle begins anew with a smaller % destined to ever own their own home again.

Minus net immigration, population growth is essentially flat and has been for more than a decade. Money destruction in the banking system is still running hard and is likely to worsen due to foreclosuregate. BofA and Wells Fargo are headed for shotgun weddings to avoid insolvencies and at least a 1,000 other banks are going bye-bye in the coming years with an expected minimum of 200 outright failures and forced mergers for this year alone. I standby my prediction.

our pop is growing at a rate of 9%/decade. Homes are being destroyed at a reasonably rapid pace. I realize there is inventory, but that won't last a decade. Homes are too perishable to sit vacant for 10 years. And there are a lot of older homes in the US that will be worthless if they sit idle for 10 years.

Nobody knows where the bottom is, but odds are good that investors will assume a larger share of US residential real estate and we will begin a long term shift toward an increased rental market and a decrease in personal home ownership.

So prices will be increasingly determined by what price landlords will pay, and renters can afford to pay a lot more for homes than owners can. No taxes, no interest, no maintenance, not as many improvements.

Doesn't matter. Banks won't take risks on borrowers no matter how far values drop.

 

[loosecannon]

Minus net immigration, population growth is essentially flat and has been for more than a decade. Money destruction in the banking system is still running hard and is likely to worsen due to foreclosuregate. BofA and Wells Fargo are headed for shotgun weddings to avoid insolvencies and at least a 1,000 other banks are going bye-bye in the coming years with an expected minimum of 200 outright failures and forced mergers for this year alone. I standby my prediction.

our pop is growing at a rate of 9%/decade. Homes are being destroyed at a reasonably rapid pace. I realize there is inventory, but that won't last a decade. Homes are too perishable to sit vacant for 10 years. And there are a lot of older homes in the US that will be worthless if they sit idle for 10 years.

Nobody knows where the bottom is, but odds are good that investors will assume a larger share of US residential real estate and we will begin a long term shift toward an increased rental market and a decrease in personal home ownership.

So prices will be increasingly determined by what price landlords will pay, and renters can afford to pay a lot more for homes than owners can. No taxes, no interest, no maintenance, not as many improvements.

Doesn't matter. Banks won't take risks on borrowers no matter how far values drop.

I wasn't talking about banks or loans, but thanks for supporting my point inadvertently.

 

[Revere]

our pop is growing at a rate of 9%/decade. Homes are being destroyed at a reasonably rapid pace. I realize there is inventory, but that won't last a decade. Homes are too perishable to sit vacant for 10 years. And there are a lot of older homes in the US that will be worthless if they sit idle for 10 years.

Nobody knows where the bottom is, but odds are good that investors will assume a larger share of US residential real estate and we will begin a long term shift toward an increased rental market and a decrease in personal home ownership.

So prices will be increasingly determined by what price landlords will pay, and renters can afford to pay a lot more for homes than owners can. No taxes, no interest, no maintenance, not as many improvements.

Doesn't matter. Banks won't take risks on borrowers no matter how far values drop.

I wasn't talking about banks or loans, but thanks for supporting my point inadvertently.

Property values and inventories and the size of the pool of buyers is moot.

Government has burned the free market for mortgage money to the ground, with higher capital reserve requirements and free money from the Fed for banks to play with in the stock market.

There is no upside for banks to make home loans.