Comments on: A Peak and 2 Bottoms

By: TheArcadian

TheArcadian — Sat, 07 Jun 2008 18:25:02 +0000

If compared to the previous two bubbles, I’d have to agree that this housing decline will be much faster and harder. It is unfortunate that many would-be knife catchers are basing their purchase on false hopes and emotions rather than fundemental values and affordability.

It was only 5 years ago when many of the $700k homes/PUDs you see listed today were going for only $350-400k. Now that speculation and liar loans are gone, prices will decline and flatten out as Johnny mentioned early.

By: Trudging towards Sanity Claws

Trudging towards Sanity Claws — Sat, 07 Jun 2008 11:40:15 +0000

I think your downslope is too slow and too slight. My guess is that it will go to 63 before 2012, violating the trend line based upon the previous two lows. This is simply explained by noting that the defaults and foreclosures corresponding to those lows were nominally one fifth of the current rates.

Additionally, the subprime mortgages have yet to hit their peak reset (another 4 or 5 months?) and then we wait a year or so for the option ARMs to begin their climb to their peak in about 2 years. By that time the rest of the country will have had it with bailing out the Really Stupid People in California, Florida, Arizona, Nevada. ‘Had it’ may include the possibility that we’re all broke, unemployed and on welfare and foodstamps too. (I sure hope these Democrats don’t decide our IRA’s and 401k’s are low-hanging ripe fruit — though Friday implies a shrivelled future there).

Any expectation that a bottom has been reached before housing’s median drops to a usual multiple of median income will be dashed again and again.

Today’s knife catchers (anyone who buys today at more than 20% to 30% of the most recent high price) will be characterized as just more bubble people in that sometime future history.

By: Johnny

Johnny — Sat, 07 Jun 2008 02:37:42 +0000

The looming foreclosure of Ed McMahon’s Bel Air home is the epitome of what’s wrong with the attitude of so many in America today.

They spend every dime they have and use the home as an ATM to bail themselves out. While sad McMahon squandered millions and still blames others for his bad decisions.

A 25% decline in RE while possible I don’t think will happen; however, prices will declines in “real” terms. Meaning after inflation, so if a home is worth $500k today it will still be worth $500k in say 8yrs. I’ve seen this happen in resort areas like Lake Arrowhead and Palm Springs so anything is possible.

By: Anonymous

Anonymous — Fri, 06 Jun 2008 23:09:28 +0000

Personally I think RE prices in Arcadia and other SGV cities will come down more than 25% over the next three years, but I guess we’ll see. I’m a rent-saver buyer so I’ll jump in when it costs about the same to buy or rent a comparable house. Prices have come down a bit, but renting is much much cheaper than buying. In this day and age, two working professionals should be able to plunk down $120k and afford $3k/mortgage payment without too much trouble.

If people can’t put at least 20% down and afford the 30-yr fixed rate monthly payments, then they have no business in buying…regardless if house prices are $400k, $600k or $900k.

By: puckhead

puckhead — Fri, 06 Jun 2008 17:06:05 +0000

You know what’s funny about your post? Even if prices in Arcadia come down another 25%, median prices will still be north of $600K and people will still complain that they can’t come up with $120K in down payment and afford a $3K mortgage and that prices NEED to come down more so that they can buy in Arcadia like they richly deserve it.